Date: 1st December 2005
VeriFone Reports Fourth Quarter and Fiscal Year End 2005 Results
Fourth-Quarter Revenues Increased 20%; EBITDA Margins (as adjusted) Exceeded 20% for the Quarter; GAAP Net Income More Than Quadrupled over the Fourth Quarter of 2004
SAN JOSE, Calif., Dec 01, 2005 (BUSINESS WIRE) -- VeriFone Holdings, Inc. (NYSE: PAY), a leading global provider of technology that enables electronic payment transactions, today announced financial results for the three months and fiscal year ended October 31, 2005.
Net revenues, for the three months ended October 31, 2005, were $130.5 million, an increase of 20% over net revenues of $108.6 million for the comparable period of 2004. The increase was driven by a 34% increase in net revenues from VeriFone''s International business and a 13% increase in net revenues in VeriFone''s North America business.
Gross margins, under generally accepted accounting principles (GAAP), for the three months ended October 31, 2005 were 42.7%, compared with 36.5% for the fourth quarter of 2004. Gross margins, excluding non-cash amortization of purchased intangibles and stock-based compensation expense, expanded for the fourth consecutive quarter and reached a record level of 44.0% compared with 38.3% for the fourth quarter of 2004.
Net income, for the three months ended October 31, 2005, was $12.1 million, or $0.18 per diluted share, compared to $2.8 million, or $0.05 per diluted share, for the comparable period of 2004. Net Income, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, for the three months ended October 31, 2005 was $14.9 million, or $0.22 per diluted share, compared to $6.0 million, or $0.11 per diluted share, for the comparable period of 2004.
EBITDA, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, expanded for the fifth consecutive quarter and reached a record level of $26.5 million, a 70% increase compared with the $15.5 million earned in the three months ended October 31, 2004. As a percent of net revenues, EBITDA for the three months ended October 31, 2005 reached a record level of 20.3%, compared to the 14.3% recorded in the three months ended October 31, 2004.
Net revenues, for the fiscal year ended October 31, 2005, were $485.4 million, an increase of 24% over net revenues of $390.1 million for the comparable period of 2004.
Net income, attributable to common stockholders, for the fiscal year ended October 31, 2005 was $33.2 million, compared to $0.65 million for the fiscal year ended 2004. Net Income as adjusted for the fiscal year end October 31, 2005 was $49.7 million, compared to $24.6 million, for the fiscal year ended 2004.
EBITDA, as adjusted, for the fiscal year ended October 31, 2005, was $86.4 million, an increase of 51% over EBITDA, as adjusted of $57.2 million for the comparable period of 2004. As a percent of net revenues, EBITDA for the fiscal year ended October 31, 2005 was 17.8%, compared to 14.7% for the comparable period of 2004.
"VeriFone had another outstanding quarter and an excellent 2005. We successfully executed our strategic objectives and achieved record revenue, operating margins and earnings growth," said Douglas G. Bergeron, Chairman and Chief Executive Officer.
"The world-wide market acceptance of our industry leading product offering remains very strong. We look forward to continuing to grow as we take advantage of the key drivers in our industry - including accelerating demand for wireless payment solutions, the proliferation of IP, increasingly complex security standards and the proliferation of first use payment systems in many new and emerging markets worldwide," continued Bergeron.
Fourth Quarter Highlights
-- VeriFone completed its follow-on offering on September 23, 2005, raising gross proceeds of approximately $272 million; VeriFone''s portion of the proceeds were approximately $49 million net of expenses and underwriting discounts.
-- VeriFone recently announced the formation of VeriFone Transportation Systems ("VTS"), a joint venture between VeriFone and TaxiTronic. TaxiTronic has an estimated two-thirds market share of metering systems in New York City taxi cabs. VTS is addressing the emerging market for government mandated credit card acceptance in taxi cabs. The MX870, the industry''s only full motion video payment solution, will form part of the VTS offering.
-- VeriFone continued to experience rapid growth in its IP business on a worldwide basis and to further support this effort recently announced the availability of McAfee(R) VirusScan(R) Mobile for Verix(R), the first virus protection for payment solutions at the point of sale (POS) in the U.S.
-- VeriFone announced on November 29, as part of the Mexican
Terminalization initiative, a second major order from a major Mexican bank for a combination of IP, Wi-Fi and GPRS systems.
-- In November, VeriFone introduced the VeriFone Vx 670 wireless system, ideal for the table-service restaurant industry and other mobile payment applications. The Vx 670 is the smallest and lightest fully-functional handheld payment platform in the mobile payments industry and represents a new generation in form factor, ergonomics and overall usability.
-- VeriFone received the CB5.2 certification from Groupement des Cartes Bancaires in France for our Vx 510 countertop payment solution. The CB5.2 standard, managed by GIE Cartes Bancaires, complies with the latest French smart card payment specifications. This certification paves the way for VeriFone to begin selling counter-top solutions in the key French market for the first time in several years.
Reconciliations for both of the non-GAAP measures presented in this press release are provided at the end of this press release. Management uses the non-GAAP measures presented in this release to help them evaluate VeriFone''s performance and to compare VeriFone''s current results with those for prior periods as well as with the results of other companies in our industry, but cautions investors that these non-GAAP measures should not be considered as substitutes for disclosures made in accordance with GAAP.
The management of VeriFone will host a conference call, which will be simultaneously webcast, on December 1, 2005 at 1:30 p.m. (PST) to discuss VeriFone''s fourth quarter results. Management may provide forward looking guidance on this conference call. To access the live conference call, the dial-in numbers are as follows:
Domestic callers: 866-202-4367
International callers: 617-213-8845
To access the audio webcast, please go to VeriFone''s website (http://ir.verifone.com) at least ten minutes prior to the call to register. The recorded audio webcast will be available on VeriFone''s website until December 15, 2005.
A replay of the conference call, which can be accessed by dialing toll-free 888-286-8010, and outside the U.S. 617-801-6888, will be available until December 15, 2005. The access code for the replay is 81036070.
About VeriFone Holdings, Inc. (www.verifone.com)
VeriFone Holdings, Inc. ("VeriFone") (NYSE: PAY), a global leader in secure electronic payment technologies, provides expertise, solutions and services for today with a migration strategy for tomorrow. VeriFone delivers solutions that add value to the point of sale, resulting in improved merchant retention and the generation of new sources of revenue for its partners and customers. VeriFone solutions are specifically designed to meet the needs of vertical markets including financial, retail, petroleum, government and healthcare.
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 are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the 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 Holdings, Inc. These risks and uncertainties include: the status of our relationship with and condition of third parties upon whom we rely in the conduct of our business, our dependence on a limited number of customers, uncertainties related to the conduct of our business internationally, our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations, our dependence on a limited number of key employees, short product cycles, rapidly changing technologies and maintaining competitive leadership position with respect to our payment solution offerings, our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, and our ability to protect against fraud. For a further list and description of such risks and uncertainties, see our filings with the Securities and Exchange Commission, including our Form S-1 registration statement, our quarterly report on Form 10-Q, and, when filed, our annual report on Form 10-K for the year ended October 31, 2005. 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.
[Condensed Consolidated Statements of Operations available on request]