Verifone (NYSE: PAY), a world leader in payments and commerce
solutions, today announced financial results for the three months
ended July 31, 2016.
Third Quarter Financial Highlights
- GAAP net revenues of $488 million and
Non-GAAP net revenues of $493 million
- GAAP net loss per diluted share of
$0.28
- Non-GAAP net income per diluted share
of $0.42
- Operating cash flow of $13 million
"We made real progress during the third quarter in further
repositioning Verifone, building our services business and bringing
our new devices to market. Despite this progress, Q3 was a
challenging quarter for Verifone on revenues. We moved decisively
to reduce our cost structure, and those initial efforts helped us
exceed our revised EPS target,” said Paul Galant, Chief Executive
Officer of Verifone. "We are managing through what we believe are
difficult but temporary local market and lingering EMV adoption
issues. Our outlook for Q4 now assumes a significantly slower EMV
rollout, and we are projecting fiscal year 2017 consolidated
revenues to be approximately 3% below fiscal year 2016 levels. That
said, we are relentlessly executing the long-term vision for
Verifone to transform from a box shipper to a services
provider.”
(UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AND
PERCENTAGES)
Three Months Ended July 31,
Nine Months Ended July 31, 2016
2015 Change 2016
2015 Change GAAP: Net revenues $ 488 $
510 (4.3 )% $ 1,528 $ 1,486 2.8 % Gross margin as a % of net
revenues 39.2 % 40.5 % (1.3 ) pts 40.4 % 41.0 % (0.6 ) pts Net
income (loss) per diluted share $ (0.28 ) $ 0.08 nm $ (0.04 ) $
0.35 nm Non-GAAP (1): Net revenues $ 493 $ 510 (3.4 )% $
1,539 $ 1,487 3.4 % Gross margin as a % of net revenues 42.2 % 41.7
% 0.5 pts 42.5 % 42.3 % 0.2 pts Net income per diluted share $ 0.42
$ 0.47 (10.6 )% $ 1.36 $ 1.34 1.5 %
(1) Reconciliations for the Non-GAAP
measures are provided at the end of this press release.
Fourth Quarter and Fiscal Year 2016 Outlook
Guidance for the fourth fiscal quarter of 2016 is as
follows:
- Non-GAAP net revenues of $460
million
- Non-GAAP net income per diluted share
of $0.28-0.29
Guidance for the full fiscal year 2016 is as follows:
- Non-GAAP net revenues of $2.0
billion
- Non-GAAP net income per diluted share
of $1.64 - $1.65
Conference Call
Verifone will hold its earnings conference call today, September
1st, at 1:30 pm (PT) / 4.30pm (ET). To listen to the call and view
the slides, visit Verifone’s website http://ir.verifone.com. The
recorded audio webcast will be available on Verifone's website
until September 30, 2016.
About Verifone
Verifone is transforming everyday transactions into
opportunities for connected commerce. We’re connecting payment
devices to the cloud, merging the online and in-store shopping
experience and creating the next generation of digital engagement
between merchants and consumers. We are built on a 30-year history
of uncompromised security with approximately 29 million devices and
terminals deployed worldwide. Our people are known as trusted
experts that work with our clients and partners, helping to solve
their most complex payments challenges. We have clients and
partners in more than 150 countries, including the world’s
best-known retail brands, financial institutions and payment
providers.
Verifone.com | (NYSE: PAY) | @verifone
Additional Resources: http://ir.verifone.com
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's current
expectations or beliefs and on currently available competitive,
financial and economic data and are subject to uncertainty and
changes in circumstances. Actual results may vary materially from
those expressed or implied by the forward-looking statements herein
due to changes in economic, business, competitive, technological,
and/or regulatory factors, and other risks and uncertainties
affecting the operation of the business of VeriFone Systems, Inc.,
including many factors beyond our control. These risks and
uncertainties include, but are not limited to, those associated
with: execution of our strategic plan and business and operational
initiatives, including whether the expected benefits of our plan
and initiatives are achieved within expected timeframes or at all,
short product cycles and rapidly changing technologies, our ability
to maintain competitive leadership position with respect to our
payment solution offerings, our dependence on a limited number of
customers, the pace of EMV adoption in the United States, the
conduct of our business and operations internationally, including
the complexity of compliance with international laws and
regulations and risks related to adverse regulatory actions,
including tax-related audits and assessments, our ability to
protect our computer systems and networks from fraud, cyber-attacks
or security breaches, our assumptions, judgments and estimates
regarding the impact on our business of political instability in
markets where we conduct business, uncertainty in the global
economic environment and financial markets, the status of our
relationships with and condition of third parties such as our
contract manufacturers, key customers, distributors and key
suppliers upon whom we rely in the conduct of our business, our
ability to effectively integrate the businesses we acquire and to
achieve the expected benefits of such acquisitions, our ability to
effectively hedge our exposure to foreign currency exchange rate
fluctuations, successful execution of our restructuring plans,
including whether the expected benefits of restructuring plans are
achieved within expected timeframes or at all, and our dependence
on a limited number of key employees. For a further list and
description of the risks and uncertainties affecting the operations
of our business, see our filings with the Securities and Exchange
Commission, including our annual report on Form 10-K and our
quarterly reports on Form 10-Q. The forward-looking statements
speak only as of the date such statements are made. Verifone is
under no obligation to, and expressly disclaims any obligation to,
update or alter its forward-looking statements, whether as a result
of new information, future events, changes in assumptions or
otherwise.
VERIFONE SYSTEMS, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED, IN MILLIONS, EXCEPT PER
SHARE DATA AND PERCENTAGES)
Three Months Ended July 31,
Nine Months Ended July 31, 2016
2015 % Change (1) 2016
2015 % Change (1) Net revenues: Systems $
292.1 $ 333.0 (12.3 )% $ 972.1 $ 970.7 0.1 % Services 196.0
176.9 10.8 % 555.8 515.6 7.8 % Total net
revenues 488.1 509.9 (4.3 )% 1,527.9 1,486.3
2.8 %
Cost of net revenues: Systems 175.7
201.2 (12.7 )% 571.0 575.9 (0.9 )% Services 121.3 102.2
18.7 % 340.1 300.8 13.1 % Total cost of net
revenues 297.0 303.4 (2.1 )% 911.1 876.7
3.9 %
Total gross margin 191.1 206.5
(7.5 )% 616.8 609.6 1.2 %
Operating
expenses: Research and development 52.4 50.8 3.1 % 158.1 147.2
7.4 % Sales and marketing 52.8 55.5 (4.9 )% 167.3 167.5 (0.1 )%
General and administrative 49.7 54.1 (8.1 )% 157.0 150.4 4.4 %
Restructuring and related charges 33.6 5.8 nm 34.2 7.2 nm
Litigation settlement and loss contingency expense 0.6 — nm 0.6 1.2
nm Amortization of purchased intangible assets 24.3 20.0
21.5 % 65.9 62.9 4.8 % Total operating
expenses 213.4 186.2 14.6 % 583.1 536.4
8.7 %
Operating income (loss) (22.3 ) 20.3 nm 33.7 73.2 nm
Interest expense, net (9.0 ) (8.2 ) 9.8 % (25.9 ) (23.5 ) 10.2 %
Other income (expense), net 0.1 (0.6 ) nm (6.8 ) (3.5 ) nm
Income (loss) before income taxes (31.2 ) 11.5 nm 1.0 46.2 nm
Income tax provision 0.3 1.4 nm 5.4 4.3
nm
Consolidated net income (loss) (31.5 ) 10.1 nm (4.4 )
41.9 nm Net (income) loss attributable to noncontrolling interests
0.4 (0.6 ) nm (0.3 ) (1.0 ) nm
Net income (loss)
attributable to VeriFone Systems, Inc. stockholders $ (31.1 ) $
9.5 nm $ (4.7 ) $ 40.9 nm
Net income (loss)
per share attributable to VeriFone Systems, Inc. stockholders:
Basic $ (0.28 ) $ 0.08 $ (0.04 ) $ 0.36 Diluted $
(0.28 ) $ 0.08 $ (0.04 ) $ 0.35
Weighted
average number of shares used in computing net income (loss) per
share attributable to VeriFone Systems, Inc. stockholders:
Basic 110.7 114.4 110.8 113.9 Diluted
110.7 116.4 110.8 116.0 (1) "nm"
means not meaningful
VERIFONE SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN
MILLIONS) July 31, 2016
October 31, 2015 ASSETS Current assets: Cash
and cash equivalents $ 156.6 $ 208.9 Accounts receivable, net of
allowances of $13.5 and $8.8 370.1 362.0 Inventories 183.1 129.7
Prepaid expenses and other current assets 136.5 81.7
Total current assets 846.3 782.3 Property and equipment, net
195.5 191.0 Purchased intangible assets, net 340.2 317.5 Goodwill
1,134.5 1,084.0 Deferred tax assets, net 39.0 35.9 Other long-term
assets 80.0 62.4
Total assets $ 2,635.5
$ 2,473.1
LIABILITIES AND EQUITY Current
liabilities: Accounts payable $ 191.8 $ 189.4 Accruals and other
current liabilities 226.8 229.9 Deferred revenue, net 108.6 82.9
Short-term debt 65.7 39.1
Total current
liabilities 592.9 541.3 Long-term deferred revenue, net 62.5
55.3 Long-term debt 907.8 760.2 Deferred tax liabilities, net 110.9
102.9 Other long-term liabilities 90.1 78.9
Total
liabilities 1,764.2 1,538.6 Redeemable noncontrolling
interest in subsidiary 6.3 — Stockholders’ equity: Common
stock 1.1 1.1 Additional paid-in capital 1,760.8 1,726.5
Accumulated deficit (613.8 ) (535.7 ) Accumulated other
comprehensive loss (317.2 ) (292.3 )
Total VeriFone Systems,
Inc. stockholders’ equity 830.9 899.6 Noncontrolling interests
in subsidiaries 34.1 34.9
Total equity 865.0
934.5
Total liabilities, redeemable noncontrolling
interest in subsidiary and equity $ 2,635.5 $ 2,473.1
VERIFONE SYSTEMS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN
MILLIONS) Nine Months
Ended July 31, 2016 2015 Cash
flows from operating activities Consolidated net income (loss)
$ (4.4 ) $ 41.9 Adjustments to reconcile consolidated net income
(loss) to net cash provided by operating activities: Depreciation
and amortization, net 133.8 127.7 Stock-based compensation expense
32.9 32.2 Deferred income taxes, net (7.2 ) (8.7 ) Non-cash
restructuring and related charges 29.1 — Other 5.0 14.5
Net cash provided by operating activities before changes in
operating assets and liabilities 189.2 207.6 Changes
in operating assets and liabilities: Accounts receivable, net 13.5
(33.4 ) Inventories (53.3 ) (6.7 ) Prepaid expenses and other
assets (27.0 ) (20.8 ) Accounts payable (2.3 ) (0.2 ) Deferred
revenue, net 28.4 10.1 Other current and long-term liabilities
(21.8 ) 12.2 Net change in operating assets and liabilities
(62.5 ) (38.8 ) Net cash provided by operating activities 126.7
168.8
Cash flows from investing
activities Capital expenditures (82.2 ) (78.5 ) Acquisition of
businesses, net of cash acquired (172.2 ) (13.6 ) Other investing
activities, net 1.9 0.1 Net cash used in investing
activities (252.5 ) (92.0 )
Cash flows from financing
activities Proceeds from debt, net of issuance costs 490.4 60.0
Repayments of debt (333.9 ) (130.3 ) Proceeds from issuance of
common stock through employee equity incentive plans 3.3 12.7 Stock
repurchases (79.9 ) — Other financing activities, net (4.1 ) (2.5 )
Net cash provided by (used in) financing activities 75.8
(60.1 ) Effect of foreign currency exchange rate changes on
cash and cash equivalents (2.3 ) (24.8 ) Net decrease in
cash and cash equivalents (52.3 ) (8.1 ) Cash and cash equivalents,
beginning of period 208.9 250.2 Cash and cash
equivalents, end of period $ 156.6 $ 242.1
VERIFONE SYSTEMS, INC. NET REVENUES INFORMATION
(UNAUDITED, IN MILLIONS, EXCEPT PERCENTAGES)
Three Months Ended Nine Months
Ended Note
July 31,
2016
April 30,
2016
July 31,
2015
%
Change
(1) SEQ
%
Change
(1) YoY
July 31,
2016
July 31,
2015
%
Change
(1)
GAAP net revenues: North America $ 191.5 $ 209.3 $ 208.6
(8.5 )% (8.2 )% $ 636.5 $ 561.8 13.3 % Latin America 55.1 69.8 73.7
(21.1 )% (25.2 )% 179.6 212.9 (15.6 )% EMEA 190.0 197.0 172.6 (3.6
)% 10.1 % 557.4 532.2 4.7 % Asia-Pacific 51.5 50.2
55.0 2.6 % (6.4 )% 154.4 179.4 (13.9 )% Total
$ 488.1 $ 526.3 $ 509.9 (7.3 )% (4.3 )% $
1,527.9 $ 1,486.3 2.8 %
Non-GAAP net
revenues: (2) North America A $ 196.0 $ 215.4 $ 208.6 (9.0 )%
(6.0 )% $ 647.1 $ 561.9 15.2 % Latin America A 55.1 69.8 73.7 (21.1
)% (25.2 )% 179.6 212.9 (15.6 )% EMEA A 190.0 197.0 172.7 (3.6 )%
10.0 % 557.4 532.9 4.6 % Asia-Pacific A 51.5 50.2
55.0 2.6 % (6.4 )% 154.4 179.5 (14.0 )% Total
$ 492.6 $ 532.4 $ 510.0 (7.5 )% (3.4 )% $
1,538.5 $ 1,487.2 3.4 %
GAAP net
revenues $ 488.1 $ 526.3 $
509.9 (7.3 )% (4.3 )% $
1,527.9 $ 1,486.3 2.8 % Plus:
Non-GAAP net revenues adjustments A 4.5 6.1 0.1
nm nm 10.6 0.9 nm
Non-GAAP net revenues
(2) 492.6 532.4 $ 510.0 (7.5
)% (3.4 )% 1,538.5 $
1,487.2 3.4 % Net revenues from businesses
acquired in the past 12 months B (22.8 ) (24.6 ) (0.1 ) nm nm (52.6
) (0.3 ) nm
Non-GAAP organic net revenues (2) $
469.8 $ 507.8 $
509.9 (7.5 )% (7.9 )%
$
1,485.9 $ 1,486.9 (0.1
)% (1) "nm" means not meaningful. (2) Reconciliations
for the non-GAAP measures are provided at the end of this press
release.
For three months ended July 31,
2016 compared with three months ended July 31, 2015
For nine months ended July 31, 2016 compared with
nine months ended July 31, 2015
Non-GAAP
Non-GAAP Impact
organic
Impact
organic Non-GAAP due
net revenues
Non-GAAP
due
net revenues Impact due
organic to
at Impact
due
organic
to
at Net to acquired
net foreign
constant
Net to acquired
net foreign
constant
revenues businesses
revenues currency
currency
revenues businesses
revenues currency
currency
growth (A) (B)
growth (C)
growth growth
(A) (B)
growth (C)
growth North America (8.2 )% 1.3
pts (9.5 )% (0.2 )pts (9.3 )% 13.3 % 0.9 pts 12.4 % (0.1 )pts 12.5
% Latin America (25.2 )% 0.1 pts (25.3 )% (8.4 )pts (16.9 )% (15.6
)% 0.0 pts (15.6 )% (16.7 )pts 1.1 % EMEA 10.1 % 9.1 pts 1.0 % (2.6
)pts 3.6 % 4.7 % 7.0 pts (2.3 )% (5.3 )pts 3.0 % Asia-Pacific (6.4
)% 0.0 pts (6.4 )% (3.9 )pts (2.5 )% (13.9 )% 0.1 pts (14.0 )% (6.4
)pts (7.6 )% Total (4.3 )% 3.6 pts (7.9 )% (2.6 )pts (5.3 )% 2.8 %
2.9 pts (0.1 )% (5.1 )pts 5.0 %
Non-GAAP Reconciliations
VERIFONE SYSTEMS, INC. RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES (UNAUDITED, IN MILLIONS)
GAAP net
revenues
Amortization
of step-down
in deferred
revenue at
acquisition
Non-GAAP
net revenues
Net revenues
from
businesses
acquired in
the past 12
months
Non-GAAP
organic net
revenues
Constant
currency
adjustment
Non-GAAP
organic net
revenues at
constant
currency
Note (A) (A) (B) (B) (C)
(C) Three Months Ended July 31, 2016 North
America $ 191.5 $ 4.5 $ 196.0 $ (7.1 ) $ 188.9 $ 0.3 $ 189.2 Latin
America 55.1 — 55.1 — 55.1 6.1 61.2 EMEA 190.0 — 190.0 (15.7 )
174.3 4.6 178.9 Asia-Pacific 51.5 — 51.5 —
51.5 2.2 53.7 Total $ 488.1 $ 4.5
$ 492.6 $ (22.8 ) $ 469.8 $ 13.2 $
483.0 Systems $ 292.1 $ — $ 292.1 $ (2.3 ) $ 289.8 $ 8.7 $
298.5 Services 196.0 4.5 200.5 (20.5 ) 180.0
4.5 184.5 Total $ 488.1 $ 4.5 $ 492.6
$ (22.8 ) $ 469.8 $ 13.2 $ 483.0
Three Months Ended April 30, 2016 North America $ 209.3 $
6.1 $ 215.4 $ (7.7 ) $ 207.7 Latin America 69.8 — 69.8 — 69.8 EMEA
197.0 — 197.0 (16.9 ) 180.1 Asia-Pacific 50.2 — 50.2
— 50.2 Total $ 526.3 $ 6.1 $ 532.4
$ (24.6 ) $ 507.8 Systems $ 342.5 $ — $ 342.5 $ — $
342.5 Services 183.8 6.1 189.9 (24.6 ) 165.3
Total $ 526.3 $ 6.1 $ 532.4 $ (24.6 ) $ 507.8
Three Months Ended July 31, 2015 North America $
208.6 $ — $ 208.6 $ — $ 208.6 Latin America 73.7 — 73.7 — 73.7 EMEA
172.6 0.1 172.7 (0.1 ) 172.6 Asia-Pacific 55.0 — 55.0
— 55.0 Total $ 509.9 $ 0.1 $ 510.0
$ (0.1 ) $ 509.9 Systems $ 333.0 $ — $ 333.0 $ — $
333.0 Services 176.9 0.1 177.0 (0.1 ) 176.9
Total $ 509.9 $ 0.1 $ 510.0 $ (0.1 ) $ 509.9
VERIFONE SYSTEMS, INC. RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES (UNAUDITED, IN MILLIONS)
GAAP net
revenues
Amortization
of step-down
in deferred
revenue at
acquisition
Non-GAAP
net revenues
Net revenues
from
businesses
acquired in
the past 12 months
Non-GAAP
organic net
revenues
Constant
currency
adjustment
Non-GAAP
net revenues
at constant
currency
Note (A) (A) (B) (B) (C)
(C) Nine Months Ended July 31, 2016 North
America $ 636.5 $ 10.6 $ 647.1 $ (15.7 ) $ 631.4 $ 1.0 $ 632.4
Latin America 179.6 — 179.6 — 179.6 35.6 215.2 EMEA 557.4 — 557.4
(36.9 ) 520.5 27.9 548.4 Asia-Pacific 154.4 — 154.4
— 154.4 11.4 165.8 Total $ 1,527.9
$ 10.6 $ 1,538.5 $ (52.6 ) $ 1,485.9 $
75.9 $ 1,561.8 Systems $ 972.1 $ — $ 972.1 $ (7.1 ) $
965.0 $ 45.0 $ 1,010.0 Services 555.8 10.6 566.4
(45.5 ) 520.9 30.9 551.8 Total $ 1,527.9
$ 10.6 $ 1,538.5 $ (52.6 ) $ 1,485.9 $
75.9 $ 1,561.8
Nine Months Ended July 31, 2015
North America $ 561.8 $ 0.1 $ 561.9 $ — $ 561.9 Latin America 212.9
— 212.9 — 212.9 EMEA 532.2 0.7 532.9 (0.3 ) 532.6 Asia-Pacific
179.4 0.1 179.5 — 179.5 Total $ 1,486.3
$ 0.9 $ 1,487.2 $ (0.3 ) $ 1,486.9
Systems $ 970.7 $ — $ 970.7 $ — $ 970.7 Services 515.6 0.9
516.5 (0.3 ) 516.2 Total $ 1,486.3 $ 0.9
$ 1,487.2 $ (0.3 ) $ 1,486.9
VERIFONE
SYSTEMS, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED, IN MILLIONS, EXCEPT PER SHARE AMOUNTS
AND PERCENTAGES) Note
Net
revenues
Gross
margin
Gross
margin
percentage
Operating
income
(loss)
Income
tax
provision
Net income
(loss)
attributable to
VeriFone Systems, Inc.
stockholders
Three Months Ended July 31, 2016 GAAP
$ 488.1 $ 191.1 39.2 %
$ (22.3 ) $ 0.3 $
(31.1 ) Adjustments: Amortization of step-down
deferred services net revenues and associated costs of goods sold
at acquisition A 4.5 3.1 3.1 3.1 Merger and acquisition related D —
3.9 29.2 — 27.1 Stock based compensation E — 0.9 10.8 — 10.8
Restructuring and related charges F — 5.2 38.9 — 38.9 Other charges
and income F — 3.8 5.2 — 5.2 Income tax effect of non-GAAP
exclusions G — — — 7.7 (7.7 ) Non-GAAP
$ 492.6 $ 208.0 42.2 % $ 64.9 $ 8.0 $
46.3
Weighted average
number of shares used
in computing net
income (loss) per share:
Net income (loss)
per share
attributable to
VeriFone Systems, Inc.
stockholders (1)
Basic Diluted Basic Diluted GAAP
110.7 110.7 $ (0.28 ) $
(0.28 ) Adjustment for diluted shares H — 0.7
Non-GAAP 110.7 111.4 $ 0.42 $ 0.42
Three Months Ended July 31, 2015 GAAP $
509.9 $ 206.5 40.5 % $
20.3 $ 1.4 $ 9.5 Adjustments:
Amortization of step-down in deferred services net revenues at
acquisition A 0.1 0.1 0.1 — 0.1 Merger and acquisition related D —
5.0 26.2 — 27.7 Stock based compensation E — 0.4 11.2 — 11.2
Restructuring and related charges F — 0.2 6.0 — 6.0 Other charges
and income F — 0.5 7.7 — 7.7 Income tax effect of non-GAAP
exclusions G — — — 7.9 (7.9 ) Non-GAAP
$ 510.0 $ 212.7 41.7 % $ 71.5 $ 9.3 $
54.3
Weighted average
number of shares used
in computing net
income per share:
Net income per share
attributable to
VeriFone Systems, Inc.
stockholders (1)
Basic Diluted Basic Diluted GAAP
114.4 116.4 $ 0.08
$ 0.08 Non-GAAP 114.4 116.4 $
0.47 $ 0.47
(1) Diluted net income (loss) per share is
calculated by dividing the Net income (loss) attributable to
VeriFone Systems, Inc. stockholders by the Weighted average number
of shares used in computing net income (loss) per share
attributable to VeriFone Systems, Inc. stockholders.
VERIFONE SYSTEMS, INC. RECONCILIATIONS OF
NON-GAAP FINANCIAL MEASURES (UNAUDITED, IN MILLIONS, EXCEPT
PER SHARE AMOUNTS AND PERCENTAGES) Note
Net
revenues
Gross
margin
Gross
margin
percentage
Operating
income
Income tax
provision
Net income (loss)
attributable to
VeriFone Systems, Inc.
stockholders
Nine Months Ended July 31, 2016 GAAP
$ 1,527.9 $ 616.8 40.4 %
$ 33.7 $ 5.4 $ (4.7
) Adjustments: Amortization of step-down in deferred
services net revenues and associated costs of goods sold at
acquisition A 10.6 7.5 7.5 — 7.5 Merger and acquisition related D —
11.8 82.3 — 80.3 Stock based compensation E — 2.5 32.9 — 32.9
Restructuring and related charges F — 5.1 39.3 — 39.3 Other charges
and income F — 10.4 13.6 — 17.3 Income tax effect of non-GAAP
exclusions G — — — 20.8 (20.8 )
Non-GAAP $ 1,538.5 $ 654.0 42.5 % $ 209.4 $
26.2 $ 151.9
Weighted average
number of shares used
in computing net
income per share:
Net income per share
attributable to
VeriFone Systems, Inc.
stockholders (1)
Basic Diluted Basic Diluted GAAP
110.8 110.8 $ (0.04 ) $
(0.04 ) Adjustment for diluted shares H — 0.9
Non-GAAP 110.8 111.7 $ 1.37 $ 1.36
Nine Months Ended July 31, 2015 GAAP $
1,486.3 $ 609.6 41.0 % $
73.2 $ 4.3 $ 40.9 Adjustments:
Amortization of step-down in deferred services net revenues at
acquisition A 0.9 0.9 0.9 — 0.9 Merger and acquisition related D —
14.9 79.9 — 79.6 Stock based compensation E — 1.6 32.2 — 32.2
Restructuring and related charges F — 0.3 7.5 — 7.5 Other charges
and income F — 1.4 17.3 — 17.3 Income tax effect of non-GAAP
exclusions G — — — 22.5 (22.5 )
Non-GAAP $ 1,487.2 $ 628.7 42.3 % $ 211.0 $
26.8 $ 155.9
Weighted average
number of shares used
in computing
net income (loss)
per share:
Net income (loss) per share
attributable to
VeriFone Systems, Inc.
stockholders (1)
Basic Diluted Basic Diluted GAAP
113.9 116.0 $ 0.36
$ 0.35 Non-GAAP 113.9 116.0 $
1.37 $ 1.34
(1) Diluted net income (loss) per share is
calculated by dividing the Net income (loss) attributable to
VeriFone Systems, Inc. stockholders by the Weighted average number
of shares used in computing net income (loss) per share
attributable to VeriFone Systems, Inc. stockholders.
VERIFONE SYSTEMS, INC. RECONCILIATIONS OF
NON-GAAP FINANCIAL MEASURES (UNAUDITED, IN MILLIONS)
Three Months
Ending
October 31, 2016
Year Ending
October 31, 2016
Guidance GAAP net revenues $ 456 $ 1,986 Adjustments
to net revenues
A 4 14 Non-GAAP net revenues $ 460
$ 2,000
NON-GAAP FINANCIAL MEASURES
This press release and its attachments include several non-GAAP
financial measures, including non-GAAP net revenues; non-GAAP
Systems net revenues; non-GAAP Services net revenues; net revenues
from businesses acquired in the past 12 months; non-GAAP organic
net revenues; non-GAAP organic net revenues at constant currency;
non-GAAP gross margin; non-GAAP gross margin as a percentage of
non-GAAP net revenues; non-GAAP operating income; non-GAAP income
tax provision; non-GAAP net income attributable to Verifone
Systems, Inc. shareholders; non-GAAP weighted average diluted
shares; and non-GAAP net income (loss) per diluted share. This
press release also includes certain forward-looking non-GAAP
financial measures, specifically projected non-GAAP net revenues
and non-GAAP net income per diluted share for the fourth fiscal
quarter and full fiscal year 2016. The corresponding
reconciliations of these non-GAAP financial measures to the most
comparable GAAP financial measures, to the extent available without
unreasonable effort, are included in this press release.
Management uses non-GAAP financial measures only in addition to
and in conjunction with results presented in accordance with GAAP.
Management believes that these non-GAAP financial measures help it
to evaluate Verifone's performance and operations and to compare
Verifone's current results with those for prior periods as well as
with the results of peer companies. Verifone incurs, due to
differences in debt, capital structure and investment history,
geographic presence and associated currency impacts, certain income
and expense items, such as stock based compensation, amortization
of acquired intangibles and other non-cash expenses, that differ
significantly from Verifone's competitors. The non-GAAP financial
measures reflect Verifone's reported operating performance without
such items. Management also uses these non-GAAP financial measures
in Verifone's budget and planning process. Management believes that
the presentation of these non-GAAP financial measures is useful to
investors in comparing Verifone's operating performance in any
period with its performance in other periods and with the
performance of other companies that represent alternative
investment opportunities. These non-GAAP financial measures contain
limitations and should be considered as a supplement to, and not as
a substitute for, or superior to, disclosures made in accordance
with GAAP.
These non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles and may
therefore differ from non-GAAP financial measures used by other
companies. In addition, these non-GAAP financial measures do not
reflect all amounts and costs, such as acquisition related costs,
employee stock-based compensation costs, cash that may be expended
for future capital expenditures or contractual commitments, working
capital needs, cash used to service interest or principal payments
on Verifone's debt, income taxes and the related cash requirements,
and restructuring charges, associated with Verifone's results of
operations as determined in accordance with GAAP.
Furthermore, Verifone expects to continue to incur income and
expense items that are similar to those that are excluded by the
non-GAAP adjustments described herein. Management compensates for
these limitations by also relying on the comparable GAAP financial
measures.
Our GAAP and non-GAAP net revenues are presented for our four
main geographic regions: North America, Latin America, EMEA and
Asia-Pacific. North America includes the US and Canada. Latin
America includes South America, Central America, Mexico and the
Caribbean. EMEA includes Europe, Russia, the Middle East, and
Africa. Asia-Pacific includes Australia, New Zealand, China, India
and throughout the rest of Greater Asia, including other
Asia-Pacific Rim countries.
Note A: Non-GAAP net revenues, costs of goods sold and gross
margin. Non-GAAP net revenues exclude the fair value decrease
(step-down) in deferred revenue at acquisition. Non-GAAP costs of
goods sold exclude the costs of goods associated with the fair
value decrease (step-down) in deferred revenue at acquisition.
Although the step-down of deferred revenue fair value at
acquisition and associated costs of goods sold are reflected in our
GAAP financial statements, they result in net revenues and gross
margins immediately post-acquisition that are lower than net
revenues and gross margins that would be recognized in accordance
with GAAP on those same services if they were sold under contracts
entered into post-acquisition. We adjust the step-down to achieve
comparability to net revenues and gross margins of the acquired
entity earned pre-acquisition and to our GAAP net revenues and
gross margins to be earned on contracts sold in future periods.
These non-GAAP net revenues, costs of goods sold and gross margin
amounts are not intended to be a substitute for our GAAP
disclosures of net revenues, costs of goods sold and gross margin,
and should be read together with our GAAP disclosures.
Note B: Non-GAAP organic net revenues. "Non-GAAP organic
net revenues" is a non-GAAP financial measure of net revenues
excluding "net revenues from businesses acquired in the past 12
months" (as defined below). Verifone determines non-GAAP organic
net revenues by deducting net revenues from businesses acquired in
the past 12 months from non-GAAP net revenues. This non-GAAP
measure is used to evaluate Verifone net revenues without the
impact of net revenues from acquired businesses, as Verifone
analyzes performance both with and without the impact of our recent
acquisitions.
Net revenues from businesses acquired in the past 12
months consists of net revenues derived from the sales channels
of acquired resellers and distributors, and net revenues from
Systems and Services attributable to businesses acquired in the 12
months preceding the respective financial quarter(s). For
acquisitions of small businesses that are integrated within a
relatively short time after the close of the acquisition, we assume
quarterly net revenues attributable to such acquired businesses
during the 12 months following acquisition remain at the same level
as in the first full quarter after the acquisition closed. During
periods prior to our acquisition of former customers, net revenues
from businesses acquired in the past 12 months consists of sales by
Verifone to that former customer for that period.
Note C: Non-GAAP net revenues at constant currency.
Verifone determines non-GAAP net revenues at constant currency by
recomputing non-GAAP net revenues denominated in currencies other
than U.S. Dollars in the current fiscal period using average
exchange rates for that particular currency during the
corresponding financial period of the prior year. Verifone uses
this non-GAAP measure to evaluate performance on a comparable basis
excluding the impact of foreign currency fluctuations.
Note D: Merger and Acquisition Related. Verifone adjusts
certain revenues and expenses for items that are the result of
mergers and acquisitions.
Merger and acquisition related adjustments include the
amortization of intangible assets, fixed asset fair value
adjustments, contingent consideration adjustments, incremental
costs associated with acquisitions (such as legal and other
professional fees) and acquisition integration expenses (such as
costs of personnel required to assist with integration
transitions). In addition, we adjust for changes in estimate and
final resolution of contingencies that existed at the time of
acquisition. Acquisition related expenses also result from events
which arise from unforeseen circumstances which often occur outside
the ordinary course of business.
Verifone analyzes the performance of its operations without
regard to these adjustments. In determining whether any merger or
acquisition related adjustment is appropriate, Verifone takes into
consideration, among other things, how such adjustments would or
would not aid the understanding of the performance of its
operations.
Note E: Stock-Based Compensation. Our non-GAAP financial
measures eliminate the effect of expense for stock-based
compensation because they are non-cash expenses that management
believes are not reflective of ongoing operating results. In
particular, because of varying available valuation methodologies,
subjective assumptions and the variety of award types which affect
the calculations of stock-based compensation, we believe that the
exclusion of stock-based compensation allows for more accurate
comparisons of our operating results to our peer companies.
Stock-based compensation is very different from other forms of
compensation. A cash salary or bonus has a fixed and unvarying cash
cost. In contrast the expense associated with a stock based award
is unrelated to the amount of compensation ultimately received by
the employee; and the cost to the company is based on valuation
methodology and underlying assumptions that may vary over time and
does not reflect any cash expenditure by the company. Furthermore,
the expense associated with granting an employee a stock based
award can be spread over multiple years and may be reversed based
on forfeitures which may differ from our original assumptions
unlike cash compensation expense which is typically recorded
contemporaneously with the time of award or payment.
Note F: Other Charges and Income (Loss). Verifone
excludes certain expenses, other income (expense) and losses that
we have determined are not reflective of ongoing operating results.
It is difficult to estimate the amount or timing of these items in
advance. Although these events are reflected in our GAAP financial
statements, we exclude them in our non-GAAP financial measures
because we believe these items may limit the comparability of our
ongoing operations with prior and future periods. These adjustments
for other charges and income include:
- Certain costs incurred in connection
with senior executive management changes, such as non-compete
arrangement fees, legal fees, recruiter fees and sign on
bonuses.
- Certain expenses, such as professional
services and certain personnel costs, incurred on initiatives to
transform, streamline and centralize our global operations.
- Restructuring and related charges,
including restructure costs, write down of assets held for sale,
and charges for costs to terminate a contract related to a service
we will no longer offer in Turkey, as well as losses related to
certain exit activities initiated as part of our strategic review
of under-performing businesses and global transformation
initiatives.
- Foreign exchange losses related to
obligations denominated in currencies of highly inflationary
economies.
- Costs associated with litigation and
other loss contingencies, penalties and settlements.
We assess our operating performance with these amounts included
and excluded, and by providing this information, we believe that
users of our financial statements are better able to understand the
financial results of what we consider to be our continuing
operations.
Note G: Income Tax Effect of Non-GAAP exclusions. Income
taxes are adjusted for the tax effect of the adjusting items
related to our non-GAAP financial measures and to reflect our
medium to long term estimate of cash taxes on a non-GAAP basis, in
order to provide our management and users of the financial
statements with better clarity regarding the on-going comparable
performance and future liquidity of our business. Under GAAP our
Income tax provision as a percentage of Income before income taxes
was 0.9% for the fiscal quarter ended July 31, 2016, 12.6% for
the fiscal quarter ended July 31, 2015, 567.6% for the nine
months ended July 31, 2016 and 9.3% for the nine months ended
July 31, 2015. For non-GAAP purposes, we used a 14.5% rate for
all periods presented.
Note H: Non-GAAP diluted shares. Diluted non-GAAP
weighted average shares include additional shares that are dilutive
for non-GAAP computations of earnings per share in periods when we
have a non-GAAP net income and a GAAP basis net loss.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160901006273/en/
VerifoneInvestor Relations:Chris Mammone,
408-232-7230ir@verifone.comorMedia
Relations:Andy Payment, 770-754-3541andy.payment@verifone.com
Paymentus (NYSE:PAY)
Historical Stock Chart
From Apr 2024 to May 2024
Paymentus (NYSE:PAY)
Historical Stock Chart
From May 2023 to May 2024