PYMNTS-MonitorEdge-May-2024

Amid Retail and Device Demand, Verifone Edges EPS Estimates, Divestitures Loom

Verifone

Payments firm Verifone posted second quarter results that came in at the high end of guidance for the top line, and edged Wall Street estimates on the bottom line by a penny — but investors sent the stock down three percent after hours amid news of divestitures and related charges, and slowdowns in China, among other issues.

The headline numbers showed that the company posted revenues of just under $474 million for the quarter, which was down 11 percent year over year – lapping a strong quarter propelled by the shift to EMV, and representing a four percent boost over the first quarter of the current fiscal year.

Looking out by geography, the company said that North American sales were down six percent sequentially, and 25 percent annually (EMV again, hit also by delays by gas stations in converting to EMV fuel pumps).

A few bright spots in North America: the small business vertical grew sequentially, reversing earlier trends, while retailing was up 12 percent due to sales to restaurants.  Other regions such as Latin America and Asia Pacific were up double digits.

The revenues, on a consolidated basis, were roughly $1 million better than the Street expected, and came in at the high end of the company’s own $470 million to $474 million range.  Earnings per share of $0.30 stood one penny better than estimates.

But while Verifone said that it had seen growth in its key payments-focused markets, it also said that it would be pursuing the sale of its taxi business and also reconfiguring its China operations to rest within a joint venture in which it will have an interest of 20 percent or less.

Writ large, the strategy is one where marginal businesses will be shunted aside (Verifone had telegraphed this intent in earlier calls) so the firm can focus on, as CEO Paul Galant noted on the conference call with analysts, “next generation solutions.”

As is germane to the taxi business, Galant stated that competing in that vertical would require capital and focus and “additional resources” that would be better applied elsewhere.

He said that he was “encouraged by our progress” and “growth in the sales pipeline” of Engage, Carbon and mobile offerings.  He called Germany out as a market where Engage (a platform) is being certified and used by some of the country’s largest payments firms.

He echoed some of those sentiments in discussing China, where he cited “barriers” for success in China for Verifone as it operates “as a public U.S technology” company. That country has also had some larger issues even as Verifone has made inroads with Chinese banks, noting a slowdown in payment terminal deployments.  This comes after China had been a rapidly growing market with only four terminals per 1,000 individuals in the country – and now that ratio is 19 per 1,000.

PYMNTS-MonitorEdge-May-2024