Single-App Terminals Help Drive Financial Results for VeriFone

Sales of high-tech products such as wireless and Internet Protocol payment terminals helped VeriFone Holdings Inc. post a 21% revenue gain in its first fiscal 2006 quarter, but merchants with limited needs also helped out. In an analysts' conference call late Thursday afternoon, chairman and chief executive Douglas G. Bergeron said VeriFone products made headway in the so-called single-application market against competitors Lipman Electronics Engineering Ltd. and Hypercom Corp. In the terminal industry, a single application refers to a machine equipped for handling just one type of payment form, such as credit cards. “We enjoyed considerable success in further penetrating the $200 million single-application market, a market that we had in previous years essentially ceded to Lipman and to some extent Hypercom,” Bergeron said, later adding that independent sales organizations were important in VeriFone's effort to capitalize on the market opportunity. Net revenues for the three months ended Jan. 31 were $134.6 million compared with $111.3 million in 2005's first quarter. Net income, including operating and one-time profits, grew 136% to $13.8 million from $5.8 million a year earlier. Operating income, or earnings before interest, taxes, depreciation and amortization (EBITDA), grew 63% to $28.3 million from $17.3 million in the year-earlier period. San Jose, Calif.-based VeriFone's North American revenues grew 19% over the year-earlier period to $77.2 million. Latin America, VeriFone's second-largest market, brought in $23.9 million, up 50%, while Europe's sales were up 18% to $23 million. VeriFone's Asian revenues fell 5% to $10.7 million, but Bergeron attributed that entirely to a big spike in sales in Malaysia in December 2004, when the country was scrambling to meet the new EMV smart card standards. Excluding Malaysia, Asian revenues were up 39%. The outspoken Bergeron couldn't resist taking a potshot at competitors in response to one analyst's statement that VeriFone had outperformed its peers in the quarter. “Frankly, with all due respect, we have seen [France-based] Ingenico and Hypercom become increasingly irrelevant in a lot of the markets that we participate, with the exception obviously of France and Brazil where Ingenico still does well,” he said. Bergeron said VeriFone passed on two potential acquisitions in the quarter but remains open to acquisitions that fit its needs.