VeriFone Systems Inc. has finally shed its underperforming taxi business, but it still faces a North American market hampered by a three-year delay in an EMV deadline for U.S. petroleum marketers.
The San Jose, Calif.-based point-of-sale company sold the taxi unit on Tuesday for $30 million. VeriFone, which will retain a minority stake in the business, did not disclose the identity of the buyer. That information will be announced later this week, a company spokesperson tells Digital Transactions News.
In addition to running payments for cab fare, the business offers in-cab video content such as news, weather, and traffic reports. Launched a dozen years ago, it operates in a number of big-city fleets both in the United States and abroad, and generated $106 million in annual revenue. VeriFone said in June it was looking to divest the unit, which was falling short of targets for both payments and advertising revenue.
With that deal done, VeriFone now confronts a North American market that accounts for about one-third of its revenue but is at a standstill, in large part because the card networks extended until 2020 the date by which U.S. gas stations must convert to EMV chip card acceptance. The original deadline was 2017. The delay, VeriFone has said, has hurt sales, a point company officials repeated during a call Tuesday to discuss performance for the fourth quarter, which ended Oct. 31. “Had we not had that delay, we’d have a very robust market, but it is what it is,” chief financial officer Marc Rothman told analysts on the call.
VeriFone recorded $154.1 million in North American revenue for the quarter, down 8% from the same period in 2016. Overall, revenue reached $476.5 million, a 2.6% increase.
Chief executive Paul Galant added during the call that the company does not expect immediate improvement in petroleum sales, a factor that will continue to prove a drag on its North American results. “This petro delay really crushes that North American business for 2018,” he noted.
Still, other areas of the market show promise, Galant added, including small and medium-size businesses, known as SMBs. Roughly half of these businesses haven’t yet upgraded to EMV, he said, which presents opportunity for VeriFone. “That’s one area we’re excited about,” he told the analysts.
Another promising source of revenue lies in VeriFone’s new Engage and Carbon product lines, company officials said, along with a growing services business. The Carbon integrated devices can replace merchants’ cash registers, while the Engage line represents the company’s latest generation of POS technology. Services, which include terminal management, omnichannel capability, and other non-hardware-related offerings, reached a record $208 million in revenue in the quarter, up 3.6% year-over-year.
Galant made it plain he expects these businesses to buoy VeriFone in the coming years. “I’m confident we’ll get back to growth in 2018, offsetting the three-year pushout in U.S. petroleum EMV,” he said during his prepared remarks.
Revenue for the year ended Oct. 31 was down 6.1%, to $1.87 billion, with services accounting for 42% of that total. Galant projected total revenue for next year would fall between $1.775 billion and $1.8 billion.