VeriFone Lowers Q4 Guidance and Investors Head for the Exits

On a GAAP basis, the company posted third-quarter EPS of $0.08, which excludes stock-based compensation and restructuring charges among other items. VeriFone posted a $0.26 per share GAAP loss in the same quarter last year.

The company’s fourth-quarter guidance calls for EPS in a range of $0.47 to $0.48 and revenues in a range of $510 million to $513 million. The analysts’ consensus calls for EPS of $0.51 on revenues of $521.93 million. These numbers shouldn’t please investors Friday morning.

For the full 2015 fiscal year, the company narrowed its EPS estimate from a prior range of $1.81 to $1.84 to a new range of $1.82 to $1.83. VeriFone also raised the low end of its revenue guidance by $2 million to $1.997 billion. The high-end of the range remained unchanged at $2 billion. Consensus estimates call for EPS of $1.85 on revenues of $2 billion.

The company’s CEO, Paul Calant, said:

Q3 was a record quarter for Verifone. We saw the first half-billion-dollar revenue quarter in the companys history; grew our non-GAAP earnings per share by 18 percent over last year; and outpaced both market expectations and the industry. In addition, we will begin to launch our next generation solutions at the end of this year. As we continue to make the turn from mostly shipping terminals to delivering fully integrated solutions, our next-generation of connected devices, services, and digital commerce applications will drive unprecedented value for our clients, and long-term growth for Verifone.

VeriFone may be making progress but it is not apparent comparing its results to the analysts’ consensus estimates. When VeriFone reported fourth-quarter earnings last December the company forecast revenues at $2.02 to $2.04 billion and EPS at $1.85 to $1.90 for the 2015 fiscal year, already weaker than the then-consensus estimates calling for revenues of $2.03 billion and EPS of $1.97.

The company stopped expecting to hit even the low end of its original EPS or revenue guidance at the end of the second quarter. That is not progress; it is lowering expectations.

The company’s shares traded down about 4.7% in after-hours trading Thursday at $29.60. The current 52-week range is $27.90 to $39.25. Thomson Reuters had a consensus analyst price target of nearly $41.00 before the results were announced. The highest price target is $47.00.

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