Revenue Woes for VeriFone

VeriFone Systems Inc. (NYSE: PAY) reported adjusted third quarter 2012 EPS of $0.75 on $493 million in non-GAAP after markets closed today. In the same period a year ago, the electronic payments firm reported adjusted EPS of $0.64 on revenue of $479 million. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.70 and $498.4 million in revenue.

The company said fourth fiscal quarter non-GAAP revenue would come in at $495-$500 million and adjusted EPS would total $0.75 to $0.77. For the full 2012 fiscal year, revenues are forecast at $1.893-$1.898 billion and EPS is forecast at $2.73 to $2.75. For the fourth fiscal quarter the consensus estimate called for EPS of $0.74 on revenue of $520.15 million. For the full year, the EPS consensus estimate totaled $2.66 on revenue of $1.92 billion.

For its 2013 fiscal year, beginning November 1st, VeriFone forecast adjusted EPS of $3.25 to $3.30 on non-GAAP revenue of $2.05-$2.1 billion. The consensus forecast called for EPS of $3.23 on revenue of $2.16 billion.

The company’s CEO said:

Despite continued volatility around exchange rates, our business remains vibrant in all geographies. In the U.S., growth accelerated as we saw the beginnings of the adoption of EMV-based systems and the first significant payments services deals in the quarter. We are excited about our prospects for 2013 and beyond.

VeriFone needs to figure out how to grow revenues. In the current quarter revenues will rise slightly and then even more slightly in fiscal 2013. Earnings growth appears solid, as do margins, which continue to be quite strong.

Though the CEO noted the company’s difficulty with foreign exchange rates, the earnings release contained no other information related to currency issues.

The company’s shares are down about 11.5% in after-hours trading at $31.50. The current 52-week range is $30.10 to $55.89 and the stock closed today at $35.48. Thomson Reuters had a consensus analyst price target of $46.54 before today’s results were announced.

Paul Ausick

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