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VeriFone Reports Results for the Fourth Quarter and Fiscal 2012

VeriFone Systems, Inc. (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months (“Q4 FY12”) and fiscal year ended October 31, 2012.

Non-GAAP net income per diluted share for Q4 FY12 was $0.76, compared to $0.75 in the prior quarter and $0.53 for the three months ended October 31, 2011 (“Q4 FY11”), a 43% year-over-year increase. Non-GAAP net income per diluted share for the full year ended October 31, 2012 (“FY12”) was $2.74, a 43% year-over-year increase over the $1.92 figure for the full year ended October 31, 2011 (“FY11”). GAAP net income per diluted share for the latest quarter was $0.24, compared to $0.34 in the prior quarter and $1.84 in Q4 FY11. GAAP net income per diluted share was $0.59 for FY12 and $2.92 for FY11.

Non-GAAP net revenues for Q4 FY12 were $489 million, compared to $493 million in the previous quarter and $416 million for Q4 FY11, an 18% year-over-year increase. Non-GAAP net revenues for FY12 were $1.886 billion, a 44% increase over the $1.310 billion result for FY11. GAAP net revenues were $485 million for the latest quarter, $489 million for the prior quarter and $411 million for Q4 FY11. For FY12, GAAP net revenues totaled $1.866 billion, a 43% increase over the $1.304 billion total for FY11.

In Q4 FY12, Organic non-GAAP net revenues, which exclude net revenues from businesses acquired in the past 12 months, increased 4% from the year-ago quarter and 8% at constant currency, which assumes currency exchange rates remained the same from a year ago. North America Organic non-GAAP net revenues grew 22% both unadjusted and at constant currency, while international Organic non-GAAP net revenues declined 3% from the year-ago quarter but increased 2% at constant currency. Organic non-GAAP net revenues increased 11% in FY12 compared to FY11 and 14% at constant currency. For FY12, North America Organic non-GAAP net revenues grew 4% from FY11 both unadjusted and at constant currency, while international Organic non-GAAP net revenues grew 15% from FY11 and 20% at constant currency.

Non-GAAP gross margins were 44% for Q4 FY12, compared to 45% in the prior quarter and 40% in Q4 FY11. Non-GAAP gross margins were 44% for FY12 and 42% for FY11. GAAP gross margins were 41% for the latest quarter, 42% for the prior quarter and 31% for Q4 FY11. GAAP gross margins were 41% for FY12, compared to 38% for FY11.

Net cash provided by operating activities was $73 million in Q4 FY12 as the total cash balance grew by $44 million in the quarter.

“We are very pleased with our earnings leverage in 2012, with non-GAAP earnings per share growing over 40% for the third consecutive year,” said Douglas G. Bergeron, Chief Executive Officer. “Our investments in the next generation of payment services and systems are paying off in North America, which grew organically by 22% in Q4. Our plans for 2013 are to replicate these investments in our international markets in order to enjoy accelerated international growth later in 2013 and into 2014.”

Highlights Since Last Earnings Release

VeriFone has announced several significant in-store mobility wins in recent months. On November 7, VeriFone announced that it has entered a partnership agreement to offer retailers sophisticated mobile retailing solutions powered by VeriFone GlobalBay and integrated with the Fujitsu GlobalSTORE® solution, or as a standalone mobile point of sale. The co-branded solutions provide Fujitsu retail customers with a sophisticated mobile POS, enabling them to serve consumers from anywhere in the store and include acceptance of digital wallets and alternative payments. On September 25, VeriFone announced that The Finish Line, Inc., is enhancing the consumer buying experience with the deployment of VeriFone’s latest mobile checkout and multimedia-driven countertop payment solutions. Following a successful trial, the premium retailer of athletic shoes, apparel and accessories is in the process of deploying VeriFone systems – including 1,600 countertop multimedia MX 915 systems and 3,200 PAYware Mobile Enterprise secure mobile card acceptance devices for the iPod touch® – chain-wide with the goal of equipping all 638 locations for the holiday buying season. On September 19, VeriFone announced that Oracle’s Retail Mobile Point-of-Service was developed using the PAYware Mobile Enterprise solution and software development kit. PAYware Mobile Enterprise provided Oracle with support for the most forms of payment acceptance – including regular magnetic stripe credit and debit cards, chip-and-PIN (EMV) and contactless/NFC-enabled cards and phones – and also includes a barcode scanner for product-scanning, couponing and inventory.

VeriFone is also moving forward with its gas station media business. VeriFone’s media-enabled payment systems and services provide a state-of-the-art solution for secure payments, targeted advertising, coupons and special offers, and delivering real-time, relevant information such as weather and safety warnings. PAYMEDIA content is managed by VeriFone Media and broadcast via the VeriFone Digital Network (VNET). On October 8, VeriFone announced an agreement with Valero Retail Holdings, Inc. to implement PAYMEDIA for Secure PumpPAY in an initial pilot at corporate-operated sites in the Austin, Texas area. Secure PumpPAY solutions enable gasoline retailers and distributors to retrofit gasoline dispensers with EMV-capable, PCI-compliant payment systems that meet the latest payment security standards. The VeriFone modules incorporate full-color digital display and audio that improves the fueling experience. On October 1, VNET unveiled the next evolution of media at gas stations, providing advertisers and marketers with new promotional capabilities including on-demand coupons at the pump and transaction-specific promotions at the convenience store checkout counter. After a successful 12-month pilot, where coupon redemption rates in excess of 10% far exceeded industry norms for freestanding inserts, VeriFone is rolling out couponing to its PAYMEDIA customers.

Guidance for First Quarter 2013 and Fiscal Year 2013

For the first fiscal quarter ending January 31, 2013, VeriFone expects to report total non-GAAP net revenues in the range of $490 million to $500 million and non-GAAP net income per diluted share in the range of $0.70 to $0.73.

For the full year of fiscal 2013, the company continues to expect to report total non-GAAP net revenues in the range of $2.05 billion to $2.10 billion and non-GAAP net income per diluted share in the range of $3.25 to $3.30. Free cash flow, defined as cash flow from operations as presented under GAAP less capital expenditures, is expected in the range of $285 million to $315 million.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs and on currently available competitive, financial and economic data and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other risks and uncertainties affecting the operation of the business of VeriFone Systems, Inc. These risks and uncertainties include, but are not limited to: our assumptions, judgments and estimates regarding the impact on our business of the continued uncertainty in the global economic environment and financial markets, our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, whether the expected benefits of our business initiatives are achieved, our ability to protect against fraud, the status of our relationship with and condition of third parties such as our contract manufacturers, distributors and key suppliers upon whom we rely in the conduct of our business, our dependence on a limited number of customers, risks and uncertainties related to the conduct of our business and operations internationally, our ability to effectively hedge our exposure to foreign currency exchange rate fluctuations, our dependence on a limited number of key employees, short product cycles, rapidly changing technologies and maintaining competitive leadership position with respect to our payment solution offerings. The forward-looking statements in this press release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. For a further list and description of the risks and uncertainties affecting the operations of our business, see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. VeriFone is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

About VeriFone Systems, Inc. (www.verifone.com)

VeriFone Systems, Inc. (“VeriFone”) (NYSE: PAY) is the global leader in secure electronic payment solutions. VeriFone provides expertise, solutions and services that add value to the point of sale with merchant-operated, consumer-facing and self-service payment systems for the financial, retail, hospitality, petroleum, government and healthcare vertical markets. VeriFone solutions are designed to meet the needs of merchants, processors and acquirers in developed and emerging economies worldwide.

Additional Resources:

http://ir.verifone.com

FINANCIAL MEASURES

This press release and its attachments include several non-GAAP financial measures, including non-GAAP net revenues; net revenues from businesses acquired in the past 12 months; organic non-GAAP net revenues; North America organic non-GAAP net revenues; international organic non-GAAP net revenues; organic non-GAAP net revenues at constant currency; non-GAAP cost of net revenues; non-GAAP gross margin; non-GAAP research and development expense; non-GAAP sales and marketing expense; non-GAAP general and administrative expense; non-GAAP operating expenses; non-GAAP operating income; non-GAAP interest expense; non-GAAP interest income; non-GAAP other income (expense); non-GAAP income before income taxes; non-GAAP provision for income taxes; non-GAAP income tax rate; non-GAAP consolidated net income; non-GAAP net income attributable to noncontrolling interests; non-GAAP net income attributable to VeriFone Systems, Inc. stockholders; non-GAAP diluted shares; non-GAAP net income per share; non-GAAP net income per diluted share, as well as some of these non-GAAP financial measures as a percentage of non-GAAP net revenues. In order to assist investors, this press release provides consolidated statement of operations information on a non-GAAP basis, reflecting the adjustments made in the non-GAAP measures listed above.

Reconciliations for the non-GAAP financial measures presented in this press release to the most directly comparable GAAP measures are provided at the end of this press release.

Management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. Management believes that these non-GAAP financial measures help it to evaluate VeriFone's performance and operations and to compare VeriFone's current results with those for prior periods as well as with the results of peer companies. VeriFone incurs, due to differences in debt, capital structure and investment history, certain income and expense items, such as stock based compensation, amortization of acquired intangibles and other non-cash expenses, that differ significantly from VeriFone's competitors. The non-GAAP financial measures reflect VeriFone's reported operating performance without such items. Management also uses these non-GAAP financial measures in VeriFone's budget and planning process. Management believes that the presentation of these non-GAAP financial measures is useful to investors in comparing VeriFone's operating performance in any period with its performance in other periods and with the performance of other companies that represent alternative investment opportunities. These non-GAAP financial measures contain limitations and should be considered as a supplement to, and not as a substitute for, or superior to, disclosures made in accordance with GAAP.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and may therefore differ from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures do not reflect all amounts and costs, such as acquisition related costs, employee stock-based compensation costs, cash that may be expended for future capital expenditures or contractual commitments, working capital needs, cash used to service interest or principal payments on VeriFone's debt, income taxes and the related cash requirements, and restructuring charges, associated with VeriFone's results of operations as determined in accordance with GAAP.

Furthermore, VeriFone expects to continue to incur income and expense items that are similar to those that are excluded by the non-GAAP adjustments described herein. Management compensates for these limitations by also relying on the comparable GAAP financial measures.

Note A: Non-GAAP net revenues. Non-GAAP net revenues exclude the fair value decrease (step-down) in deferred revenue at acquisition. Although the step-down of deferred revenue fair value at acquisition is reflected in our GAAP financial statements, it results in net revenues immediately post-acquisition that are lower than net revenues that would be recognized in accordance with GAAP on those same services if they were sold under contracts entered into post-acquisition. We adjust the step-down to achieve comparability to net revenues of the acquired entity earned pre-acquisition and to our GAAP net revenues to be earned on contracts sold in future periods. These non-GAAP net revenues and non-GAAP cost of net revenues amounts are not intended to be a substitute for our GAAP disclosures of net revenues and cost of net revenues, and should be read together with our GAAP disclosures.

Note B: Organic non-GAAP net revenues. "Organic non-GAAP net revenues" is a non-GAAP financial measure of net revenues excluding "net revenues from businesses acquired in the past 12 months" (as defined below). VeriFone determines organic non-GAAP net revenues by deducting net revenues from businesses acquired in the past 12 months from non-GAAP net revenues. Where Organic non-GAAP net revenues is presented for a period longer than one fiscal quarter, it is computed as the sum of the Organic non-GAAP net revenues for each quarter during that period. This non-GAAP measure is used to evaluate VeriFone net revenues without the impact of net revenues from acquired businesses, as VeriFone analyzes performance both with and without the impact of our recent acquisitions.

Net revenues from businesses acquired in the past 12 months consists of net revenues derived from the sales channels of acquired resellers and distributors, and net revenues from system solutions and services attributable to businesses acquired in the 12 months preceding the respective financial quarter(s). For acquisitions of small businesses that are integrated within a relatively short time after the close of the acquisition, we assume quarterly net revenues attributable to such acquired businesses during the 12 months following acquisition remain at the same level as in the first full quarter after the acquisition closed. During periods prior to our acquisition of Point (a former distributor of our products), net revenues from businesses acquired in the past 12 months consists of sales by VeriFone to Point for that period.

Note C: Organic non-GAAP net revenues at constant currency. VeriFone determines organic non-GAAP net revenues at constant currency by recomputing organic non-GAAP net revenues denominated in currencies other than U.S. Dollars in the current fiscal period using average exchange rates for that particular currency during the corresponding financial period of the prior year. VeriFone uses this non-GAAP measure to evaluate performance on a comparable basis excluding the impact of foreign currency fluctuations. Where Organic non-GAAP net revenues at a constant currency is presented for a period longer than one fiscal quarter, it is computed as the sum of the Organic non-GAAP net revenues at constant currency for each quarter during that period.

Note D: Acquisition, Divestiture and Restructuring Related. VeriFone adjusts certain revenues and expenses that are the result of acquisitions, divestitures and restructurings.

Acquisition related adjustments include the amortization of purchased intangible assets and fixed asset fair value adjustments, incremental costs associated with acquisitions (such as professional fees, legal fees related to litigation assumed as part of acquisitions, and one-time charges related to acquired balances), acquisition integration expenses (such as costs of personnel required to assist with integration transitions), loss on financial instruments entered into to fix the acquisition purchase price in U.S. dollars when it is payable in foreign currencies and fair value increase (step-up) of inventory on acquisition. These adjustments do not include the fair value adjustments relating to certain contracts acquired as part of an acquisition whereby third parties have yet to fulfill their contractual obligations. In addition, we adjust for changes in estimate or final resolution of contingencies that existed at the time of acquisition. Acquisition related expenses also result from events which arise from unforeseen circumstances which often occur outside the ordinary course of business.

In the fourth fiscal quarter of 2012 we entered into a non-binding letter of intent to divest certain assets and business operations related to one of our product offerings. The net revenues, cost of net revenues and operating expenses for the fiscal quarter ended October 31, 2012 that are attributable to the business to be divested have been excluded from non-GAAP net revenues, non-GAAP cost of net revenues and non-GAAP operating expenses, respectively, for the fiscal quarter and year ended October 31, 2012.

Restructure related adjustments include all restructure charges as defined in accordance with US GAAP.

VeriFone analyzes the performance of its operations without regard to these adjusted revenues and expenses. In determining whether any acquisition, divestiture or restructure related adjustment is appropriate, VeriFone takes into consideration, among other things, how such adjustments would or would not aid the understanding of the performance of its operations.

Note E: Stock-Based Compensation. Our non-GAAP financial measures eliminate the effect of expense for stock-based compensation because they are non-cash expenses that management believes are not reflective of ongoing operating results. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types which affect the calculations of stock-based compensation, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to our peer companies. Stock-based compensation is very different from other forms of compensation. A cash salary or bonus has a fixed and unvarying cash cost. In contrast the expense associated with an award of an option or other stock based award is unrelated to the amount of compensation ultimately received by the employee; and the cost to the company is based on valuation methodology and underlying assumptions that may vary over time and does not reflect any cash expenditure by the company. Furthermore, the expense associated with granting an employee an option or other stock based award is spread over multiple years and may be reversed based on forfeitures which may differ from our original assumptions unlike cash compensation expense which is typically recorded contemporaneously with the time of award or payment.

Note F: Other Charges and Income. VeriFone excludes certain expenses and income that are the result of unique or unplanned events that are noted below. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, we exclude them in our non-GAAP financial measures because we believe these expenses may limit the comparability of our ongoing operations with prior and future periods. Examples of adjustments for other charges and income are:

  • Patent litigation loss contingency expense recorded upon a jury verdict related to periods prior to the jury verdict. These costs were not anticipated and were recorded when they became probable and estimable. They are excluded from non-GAAP operating expenses to enable comparability between periods.
  • Gains or losses on financial transactions, such as the accelerated amortization of capitalized debt issuance costs due to the early repayment of debt. These accelerated costs are excluded from non-GAAP Other income (expense), net to enable comparability between periods.
  • Certain personnel expenses that we have identified will continue to be incurred only for a fixed short period of time in connection with scheduled operational changes as we streamline and centralize some of our global operations, including international distribution and repair facilities. These expenses are referred to as "Costs of efficiency initiatives" and we excluded these expenses from non-GAAP operating expenses to enable comparability of our ongoing operations.
  • Accrued loss related to litigation initiated by several former contractors of one of our Brazilian subsidiaries following termination of their services. These costs were not anticipated and relate to certain claims for which we have determined loss is probable and estimable primarily because of a partially unfavorable court ruling in one of the underlying proceedings. The costs are excluded from non-GAAP operating expenses to enable comparability between periods.
  • Non-cash interest expense recorded relating to the adoption of ASC 470-20 Debt with conversion and other options. This expense is excluded from non-GAAP interest expense to promote comparability of our non-GAAP financial results with prior and future periods and best reflects our on-going operations.
  • Income taxes are adjusted for the tax effect of excluding items related to our non-GAAP financial measures, in order to provide our management and users of the financial statements with better clarity regarding the on-going comparable performance and future liquidity of our business. Our non-GAAP tax rates were 14% for the period May 1, 2012 through October 31, 2012, 18% for the period December 31, 2011 through April 30, 2012, and 20% for the period November 1, 2010 through December 30, 2011.

Because of these factors, we assess our operating performance with these amounts included and excluded, and by providing this information we believe that users of our financial statements are better able to understand the financial results of what we consider to be our continuing operations.

Note G: Non-GAAP diluted shares. In connection with our 1.375% Senior Convertible Notes we had entered into certain note hedge transactions. We repaid these Notes in cash upon maturity on June 15, 2012, and the then outstanding note hedge transactions expired unused on June 15, 2012. Non-GAAP diluted shares reflect the offset of shares that would have been deliverable in the periods presented prior to the maturity of the Notes pursuant to note hedge transactions. Under GAAP, shares delivered in hedge transactions are not considered offsetting shares in the fully diluted share calculation until they are actually delivered.

 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
(UNAUDITED)
                         
Three Months Ended October 31, Years Ended October 31,
2012 2011 % Change (1) 2012 2011 % Change (1)
Net revenues:
System solutions $ 335,710 $ 319,211 5.2 % $ 1,339,024 $ 1,033,911 29.5 %
Services 149,669   91,493   63.6 % 526,947   269,955   95.2 %
Total net revenues 485,379   410,704   18.2 % 1,865,971   1,303,866   43.1 %
 
Cost of net revenues:
System solutions 204,403 227,154 (10.0 )% 811,641 655,511 23.8 %
Services 81,439   57,488   41.7 % 298,489   156,605   90.6 %
Total cost of net revenues 285,842   284,642   0.4 % 1,110,130   812,116   36.7 %
 
Gross profit 199,537   126,062   58.3 % 755,841   491,750   53.7 %
 
Operating expenses:
Research and development 40,416 34,654 16.6 % 152,001 109,155 39.3 %
Sales and marketing 47,385 46,052 2.9 % 179,694 138,267 30.0 %
General and administrative 37,026 44,073 (16.0 )% 175,174 123,789 41.5 %
Patent litigation loss contingency expense nm 17,632 nm
Amortization of purchased intangible assets 23,246   8,871   162.0 % 83,795   14,829   nm
Total operating expenses 148,073   133,650   10.8 % 608,296   386,040   57.6 %
Operating income 51,464 (7,588 ) nm 147,545 105,710 39.6 %
Interest expense (13,186 ) (5,952 ) 121.5 % (62,830 ) (28,950 ) 117.0 %
Interest income 1,139 1,546 (26.3 )% 4,399 2,595 69.5 %
Other income (expense), net 2,589   5,777   (55.2 )% (20,761 ) 11,929   nm
Income (loss) before income taxes 42,006 (6,217 ) nm 68,353 91,284 (25.1 )%
Provision for (benefit from) income taxes 14,117   (205,114 ) (106.9 )% 2,050   (191,412 ) (101.1 )%
Consolidated net income 27,889 198,897 (86.0 )% 66,303 282,696 (76.5 )%
Net income attributable to noncontrolling interests (904 ) (71 ) nm (1,270 ) (292 ) nm
Net income attributable to VeriFone Systems, Inc. stockholders $ 26,985   $ 198,826   (86.4 )% $ 65,033   $ 282,404   (77.0 )%
 
Net income per share attributable to VeriFone Systems, Inc. stockholders:
Basic $ 0.25   $ 1.90   $ 0.61   $ 3.06  
Diluted $ 0.24   $ 1.84   $ 0.59   $ 2.92  
 

Weighted average shares used in computing earnings per share:

Basic 107,718 104,497 107,006 92,414
Diluted 110,342 108,339 110,315 96,616
 
(1) "nm" means not meaningful
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
NET REVENUE INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES, UNAUDITED)
      Three Months Ended     % Change (1)       Years Ended    

% YoY

Change

(1)

Note

October 31,

2012

   

July 31,

2012

   

October 31,

2011

% SEQ     % YoY

October 31,

2012

   

October 31,

2011

 
GAAP net revenues:
International
EMEA $ 201,347 $ 199,992 $ 148,613 0.7 % 35.5 % $ 755,187 $ 417,615 80.8 %
LAC 79,971 94,378 104,621 (15.3 )% (23.6 )% 370,843 275,930 34.4 %
ASPAC 58,802   56,518   41,815   4.0 % 40.6 % 207,983   123,821   68.0 %
Total International 340,120 350,888 295,049 (3.1 )% 15.3 % 1,334,013 817,366 63.2 %
North America 145,259   138,162   115,655   5.1 % 25.6 % 531,958   486,500   9.3 %
Total $ 485,379   $ 489,050   $ 410,704   (0.8 )% 18.2 % $ 1,865,971   $ 1,303,866   43.1 %
 
Non-GAAP net revenues: (Note A) (2)
International
EMEA A $ 203,980 $ 203,413 $ 149,977 0.3 % 36.0 % $ 771,469 $ 419,587 83.9 %
LAC A 79,971 94,378 104,965 (15.3 )% (23.8 )% 370,843 276,274 34.2 %
ASPAC A 59,288   56,995   44,937   4.0 % 31.9 % 211,107   126,946   66.3 %
Total International 343,239 354,786 299,879 (3.3 )% 14.5 % 1,353,419 822,807 64.5 %
North America A 145,318   138,433   115,761   5.0 % 25.5 % 532,921   486,703   9.5 %
Total $ 488,557   $ 493,219   $ 415,640   (0.9 )% 17.5 % $ 1,886,340   $ 1,309,510   44.0 %
 
GAAP net revenues: $ 485,379 $ 489,050 $ 410,704 (0.8 )% 18.2 % $ 1,865,971 $ 1,303,866 43.1 %
Plus: Non-GAAP net revenues adjustments A, D $ 3,178   $ 4,169   $ 4,936   nm nm $ 20,369   $ 5,644   nm
Non-GAAP net revenues: (Note A) 488,557 493,219 415,640 (0.9 )% 17.5 % 1,886,340   1,309,510   44.0 %
Less: net revenues from businesses acquired in the past 12 months
Hypercom B (68,510 ) nm nm (222,960 ) nm
Point B (58,232 ) (55,893 ) (6,942 ) nm nm (189,527 ) (21,632 ) nm
Other B (6,108 ) (9,343 )   nm nm (47,521 ) (1,425 ) nm
Total (64,340 ) (133,746 ) (6,942 ) nm nm (460,008 ) (23,057 ) nm
Organic non-GAAP net revenues: (Note B) 424,217   359,473   408,698   nm 3.8 % 1,426,332   1,286,453   10.9 %
 
(1) "nm" means not meaningful
(2) Reconciliations for the non-GAAP measures presented in this press release are provided at the end of this press release.
 
       
For the three months ended October 31, 2012

compared to October 31, 2011

  For the years ended October 31, 2012

compared to October 31, 2011

 

Net

revenues

growth

   

Impact due

to acquired

businesses

(A) (B)

   

Organic

non-GAAP net

revenues

growth

   

Impact

due to

foreign

currency

(C)

   

Organic

non-GAAP net

revenues at

constant

currency

growth

Net

revenues

growth

   

Impact

due to

acquired

businesses

(A) (B)

   

Organic

non-GAAP net

revenues

growth

   

Impact

due to

foreign

currency

(C)

   

Organic

non-GAAP net

revenues at

constant

currency

growth

International        
EMEA 35.5 % 35.1pts 0.4 % 5.2pts 5.6 % 80.8 % 70.9pts 9.9 % 5.0pts 14.9 %
LAC (23.6 )% 0.2pts (23.8 )% 6.8pts (17.0 )% 34.4 % 15.3pts 19.1 % 6.4pts 25.5 %
ASPAC 40.6 % 8.7pts 31.9 % 2.8pts 34.7 % 68.0 % 47.1pts 20.9 % 2.5pts 23.4 %
Total International 15.3 % 18.7pts (3.4 )% 5.4pts 2.0 % 63.2 % 48.3pts 14.9 % 5.0pts 19.9 %
North America 25.6 % 3.5pts 22.1 % 0.1pts 22.2 % 9.3 % 5.0pts 4.3 % 0.1pts 4.4 %
Total 18.2 % 14.4pts 3.8 % 3.9pts 7.7 % 43.1 % 32.2pts 10.9 % 3.1pts 14.0 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
         
October 31, 2012 October 31, 2011
(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents $ 454,072 $ 594,562
Accounts receivable, net of allowances of $8,491 and $5,658 366,887 294,440
Inventories 178,274 144,316
Prepaid expenses and other current assets 136,210   127,130  
Total current assets 1,135,443 1,160,448
Fixed assets, net 146,803 83,634
Purchased intangible assets, net 734,808 263,767
Goodwill 1,179,381 561,414
Deferred tax assets 215,139 205,496
Other assets 79,033   38,802  
Total assets $ 3,490,607   $ 2,313,561  
 
Liabilities and Equity
Current liabilities:
Accounts payable $ 193,062 $ 144,278
Accruals and other current liabilities 230,867 218,123
Deferred revenue, net 91,545 68,824
Senior convertible notes 266,981
Short-term debt 54,916   5,074  
Total current liabilities 570,390 703,280
Deferred revenue, net 37,062 31,467
Long term debt 1,252,701 211,756
Deferred tax liabilities 214,537 92,594
Other long-term liabilities 70,440   78,971  
Total liabilities 2,145,130 1,118,068
 
Redeemable noncontrolling interest in subsidiary 861 855
 
Stockholders' equity:
Common stock 1,081 1,058
Additional paid-in-capital 1,543,127 1,468,862
Accumulated deficit (204,023 ) (269,056 )
Accumulated other comprehensive loss (32,390 ) (6,671 )
Total stockholders' equity 1,307,795 1,194,193
Noncontrolling interest in subsidiaries 36,821   445  
Total liabilities and equity $ 3,490,607   $ 2,313,561  
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
    Years Ended October 31,
2012     2011
Cash flows from operating activities
Consolidated net income $ 66,303 $ 282,696
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization, net 177,832 48,318
Stock-based compensation expense 44,554 34,144
Non-cash interest expense 10,290 15,695
Deferred income taxes (22,030 ) (227,034 )
Write-off of debt issue costs upon debt extinguishment 5,268
Other (11,064 ) 4,869  
Net cash provided by operating activities before changes in operating assets and liabilities 271,153   158,688  
Changes in operating assets and liabilities, net of effects of business acquisitions:
Accounts receivable, net (53,945 ) (72,386 )
Inventories, net (19,274 ) 23,224
Prepaid expenses and other assets (19,854 ) (1,824 )
Accounts payable 31,802 29,461
Deferred revenue, net 27,316 14,801
Other current and long term liabilities (19,235 ) 22,609  
Net change in operating assets and liabilities (53,190 ) 15,885  
Net cash provided by operating activities 217,963   174,573  
 
Cash flows from investing activities
Capital expenditures (63,181 ) (14,811 )
Acquisitions of businesses, net of cash and cash equivalents acquired (1,069,412 ) (49,231 )
Collection of other notes receivable 13,376
Other investing activities, net 1,183   873  
Net cash used in investing activities (1,118,034 ) (63,169 )
 
Cash flows from financing activities
Proceeds from debt, net of issue costs 1,660,577 73
Repayments of debt (619,336 ) (10,233 )
Repayment of senior convertible notes, including interest (279,159 )
Proceeds from issuance of common stock through employee equity incentive plans 30,308 48,534
Payments of acquisition related contingent consideration (24,605 )
Distribution to noncontrolling interest stockholders (1,673 ) (418 )
Tax benefit from stock-based compensation 2,034   718  
Net cash provided by financing activities 768,146   38,674  
 
Effect of foreign currency exchange rate changes on cash and cash equivalents (8,565 ) (653 )
 
Net increase (decrease) in cash and cash equivalents (140,490 ) 149,425
Cash and cash equivalents, beginning of period 594,562   445,137  
Cash and cash equivalents, end of period $ 454,072   $ 594,562  
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Net revenues - System solutions $ 335,710 $ 350,230 $ 319,211 $ 1,339,024 $ 1,033,911
Amortization of step-down in deferred revenue at acquisition A 514   729   2,780   6,581   2,780  
Non-GAAP Net revenues - System solutions $ 336,224   $ 350,959   $ 321,991   $ 1,345,605   $ 1,036,691  
 
GAAP Net revenues - Services $ 149,669 $ 138,820 $ 91,493 $ 526,947 $ 269,955
Amortization of step-down in deferred revenue at acquisition A 2,773 3,440 2,156 13,897 2,864
Divestiture related revenues D (109 )     (109 )  
Non-GAAP Net revenues - Services $ 152,333   $ 142,260   $ 93,649   $ 540,735   $ 272,819  
 
GAAP Net revenues $ 485,379 $ 489,050 $ 410,704 $ 1,865,971 $ 1,303,866
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Divestiture related revenues D (109 )     (109 )  
Non-GAAP Net revenues $ 488,557   $ 493,219   $ 415,640   $ 1,886,340   $ 1,309,510  
 
GAAP Cost of net revenues - System solutions $ 204,403 $ 206,213 $ 227,154 $ 811,641 $ 655,511
Stock-based compensation E (325 ) (442 ) (457 ) (1,598 ) (1,539 )
Acquisition, divestiture and restructuring related costs D (734 ) (1,403 ) (25,086 ) (14,225 ) (25,832 )
Amortization of purchased intangible assets D (9,815 ) (9,630 ) (8,112 ) (37,045 ) (18,167 )
Costs of efficiency initiatives F (10 )     (10 )  
Non-GAAP Cost of net revenues - System solutions $ 193,519   $ 194,738   $ 193,499   $ 758,763   $ 609,973  
 
GAAP Cost of net revenues - Services $ 81,439 $ 75,330 $ 57,488 $ 298,489 $ 156,605
Stock-based compensation E (276 ) (118 ) (44 ) (505 ) (185 )
Acquisition, divestiture and restructuring related costs D (1,222 ) 220 (881 ) (3,504 ) (976 )
Amortization of purchased intangible assets D (870 ) (952 ) (334 ) (3,423 ) (991 )
Costs of efficiency initiatives F (95 )     (95 )  
Non-GAAP Cost of net revenues - Services $ 78,976   $ 74,480   $ 56,229   $ 290,962   $ 154,453  
 
GAAP Gross margin - System solutions $ 131,307 $ 144,017 $ 92,057 $ 527,383 $ 378,400
Amortization of step-down in deferred revenue at acquisition A 514 729 2,780 6,581 2,780
Stock-based compensation E 325 442 457 1,598 1,539
Acquisition, divestiture and restructuring related costs D 734 1,403 25,086 14,225 25,832
Amortization of purchased intangible assets D 9,815 9,630 8,112 37,045 18,167
Costs of efficiency initiatives F 10       10    
Non-GAAP Gross margin - System solutions $ 142,705   $ 156,221   $ 128,492   $ 586,842   $ 426,718  
 
GAAP System solutions gross margin as a % of System solutions net revenues 39.1 % 41.1 % 28.8 % 39.4 % 36.6 %
Amortization of step-down in deferred revenue at acquisition as a % of System solutions net revenues 0.2 % 0.2 % 0.9 % 0.5 % 0.3 %
Stock-based compensation as a % of System solutions net revenues 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Acquisition, divestiture and restructure related costs as a % of System solutions net revenues 0.2 % 0.4 % 7.9 % 1.1 % 2.5 %
Amortization of purchased intangible assets as a % of System solutions net revenues 2.9 % 2.7 % 2.5 % 2.8 % 1.8 %
Costs of efficiency initiatives as a % of System solutions net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Non-GAAP System solutions gross margin as a % of System solutions non-GAAP net revenues 42.4 % 44.5 % 39.9 % 43.6 % 41.2 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Gross margin - Services $ 68,230 $ 63,490 $ 34,005 $ 228,458 $ 113,350
Amortization of step-down in deferred revenue at acquisition A 2,773 3,440 2,156 13,897 2,864
Stock-based compensation E 276 118 44 505 185
Acquisition, divestiture and restructure related adjustments D 1,113 (220 ) 881 3,395 976
Amortization of purchased intangible assets D 870 952 334 3,423 991
Costs of efficiency initiatives F 95       95    
Non-GAAP Gross margin - Services $

73,357

  $ 67,780   $ 37,420   $ 249,773   $ 118,366  
 
GAAP Services gross margin as a % of Services net revenues 45.6 % 45.7 % 37.2 % 43.4 % 42.0 %
Amortization of step-down in deferred revenue at acquisition as a % of Services net revenues 1.9 % 2.5 % 2.4 % 2.6 % 1.1 %
Stock-based compensation as a % of Services net revenues 0.2 % 0.1 % 0.0 % 0.1 % 0.1 %
Acquisition, divestiture and restructure related adjustments as a % of Services net revenues 0.7 % (0.2 )% 1.0 % 0.6 % 0.4 %
Amortization of purchased intangible assets as a % of Services net revenues 0.6 % 0.7 % 0.4 % 0.6 % 0.4 %
Costs of efficiency initiatives as a % of Services net revenues 0.1 % 0.0 % 0.0 % 0.0 % 0.0 %
Non-GAAP Services gross margin as a % of Services non-GAAP net revenues 48.2 % 47.6 % 40.0 % 46.2 % 43.4 %
 
GAAP Gross margin $ 199,537 $ 207,507 $ 126,062 $ 755,841 $ 491,750
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Stock-based compensation E 601 560 501 2,103 1,724
Acquisition, divestiture and restructure related adjustments D 1,847 1,183 25,967 17,620 26,808
Amortization of purchased intangible assets D 10,685 10,582 8,446 40,468 19,158
Costs of efficiency initiatives F 105       105    
Non-GAAP Gross margin $ 216,062   $ 224,001   $ 165,912   $ 836,615   $ 545,084  
 
GAAP Gross margin as a % of net revenues 41.1 % 42.4 % 30.7 % 40.5 % 37.7 %
Amortization of step-down in deferred revenue at acquisition as a % of net revenues 0.7 % 0.9 % 1.2 % 1.1 % 0.4 %
Stock-based compensation as a % of net revenues 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Acquisition, divestiture and restructure related adjustments as a % of net revenues 0.4 % 0.2 % 6.3 % 0.9 % 2.1 %
Amortization of purchased intangible assets as a % of net revenues 2.2 % 2.2 % 2.1 % 2.2 % 1.5 %
Costs of efficiency initiatives as a % of net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Non-GAAP Gross margin as a % of non-GAAP net revenues 44.2 % 45.4 % 39.9 % 44.4 % 41.6 %
 
GAAP Research and development expense $ 40,416 $ 38,657 $ 34,654 $ 152,001 $ 109,155
Stock-based compensation E (2,189 ) (1,497 ) (1,199 ) (6,140 ) (4,015 )
Acquisition, divestiture and restructure related costs D (2,018 ) (1,099 ) (959 ) (6,019 ) (982 )
Costs of efficiency initiatives F $ (701 ) $   $   $ (701 ) $  
Non-GAAP Research and development expense $ 35,508   $ 36,061   $ 32,496   $ 139,141   $ 104,158  
Non-GAAP Research and development expense as a % of non-GAAP net revenues 7.3 % 7.3 % 7.8 % 7.4 % 8.0 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Sales and marketing expense $ 47,385 $ 46,182 $ 46,052 $ 179,694 $ 138,267
Stock-based compensation E (1,937 ) (5,177 ) (3,090 ) (15,781 ) (13,000 )
Acquisition, divestiture and restructure related costs D (1,457 ) (707 ) (7,079 ) (3,262 ) (8,435 )
Non-operating gains (losses) F (1,606 ) (1,606 )
Costs of efficiency initiatives F (639 )     (639 )  
Non-GAAP Sales and marketing expense $ 41,746   $ 40,298   $ 35,883   $ 158,406   $ 116,832  
Non-GAAP Sales and marketing expense as a % of non-GAAP net revenues 8.5 % 8.2 % 8.6 % 8.4 % 8.9 %
 
GAAP General and administrative expense $ 37,026 $ 43,414 $ 44,073 $ 175,174 $ 123,789
Stock-based compensation E (5,655 ) (5,211 ) (4,246 ) (20,530 ) (15,405 )
Acquisition, divestiture and restructure related costs D (3,392 ) (2,844 ) (16,457 ) (28,035 ) (28,277 )
Costs of efficiency initiatives F (107 )     (107 )  
Non-GAAP General and administrative expense $ 27,872   $ 35,359   $ 23,370   $ 126,502   $ 80,107  
Non-GAAP General and administrative expense as a % of non-GAAP net revenues 5.7 % 7.2 % 5.6 % 6.7 % 6.1 %
GAAP Patent litigation loss contingency expense $ $ $ $ 17,632 $
Patent litigation loss contingency expense F       (17,632 )  
Non-GAAP Patent litigation loss contingency expense $   $   $   $   $  
Non-GAAP Patent litigation loss contingency expense as a % of non-GAAP net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
 
GAAP Amortization of purchased intangible assets 23,246 $ 23,177 $ 8,871 $ 83,795 $ 14,829
Amortization of purchased intangible assets D (23,246 ) (23,177 ) (8,871 ) (83,795 ) (14,829 )
Non-GAAP Amortization of purchased intangible assets $   $   $   $   $  
Non-GAAP Amortization of purchased intangible assets as a % of non-GAAP net revenues 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
 
GAAP Operating expenses $ 148,073 $ 151,430 $ 133,650 $ 608,296 $ 386,040
Stock-based compensation E (9,781 ) (11,885 ) (8,535 ) (42,451 ) (32,420 )
Acquisition, divestiture and restructure related costs D (6,867 ) (4,650 ) (24,495 ) (37,316 ) (37,694 )
Amortization of purchased intangible assets D (23,246 ) (23,177 ) (8,871 ) (83,795 ) (14,829 )
Non-operating gains (losses) F (1,606 ) (1,606 )
Costs of efficiency initiatives F (1,447 ) (1,447 )
Patent litigation loss contingency expense F       (17,632 )  
Non-GAAP Operating expenses $ 105,126   $ 111,718   $ 91,749   $ 424,049   $ 301,097  
Non-GAAP Operating expenses as a % of non-GAAP net revenues 21.5 % 22.7 % 22.1 % 22.5 % 23.0 %
 
GAAP Operating income $ 51,464 $ 56,077 $ (7,588 ) $ 147,545 $ 105,710
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Stock-based compensation E 10,382 12,445 9,036 44,554 34,144
Acquisition, divestiture and restructure related adjustments D 8,714 5,833 50,462 54,936 64,502
Amortization of purchased intangible assets D 33,931 33,759 17,317 124,263 33,987
Costs of efficiency initiatives F 1,552 1,552
Non-operating gains (losses) F 1,606 1,606
Patent litigation loss contingency expense F       17,632    
Non-GAAP Operating income $ 110,936   $ 112,283   $ 74,163   $ 412,566   $ 243,987  
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
 
GAAP Operating income as a % of net revenues 10.6 % 11.5 % (1.8 )% 7.9 % 8.1 %
Amortization of step-down in deferred revenue at acquisition as a % of net revenues 0.7 % 0.9 % 1.2 % 1.1 % 0.4 %
Stock-based compensation as a % of net revenues 2.1 % 2.5 % 2.2 % 2.4 % 2.6 %
Acquisition, divestiture and restructure related adjustments as a % of net revenues 1.8 % 1.2 % 12.3 % 2.9 % 4.9 %
Amortization of purchased intangible assets as a % of net revenues 7.0 % 6.9 % 4.2 % 6.7 % 2.6 %
Costs of efficiency initiatives as a % of net revenues 0.3 % 0.0 % 0.0 % 0.1 % 0.0 %
Non-operating gains (losses) as a % of net revenues 0.3 % 0.0 % 0.0 % 0.1 % 0.0 %
Patent litigation loss contingency expense as a % of net revenues 0.0 % 0.0 % 0.0 % 0.9 % 0.0 %
Non-GAAP Operating income as a % of non-GAAP net revenues 22.7 % 22.8 % 17.8 % 21.9 % 18.6 %
 
GAAP Interest expense $ (13,186 ) $ (16,374 ) $ (5,952 ) $ (62,830 ) $ (28,950 )
Acquisition, divestiture and restructure related costs D (2,627 ) 467 (1,571 ) (1,255 ) 40
Non-cash interest expense F 3,151   2,087   4,034   15,559   15,576  
Non-GAAP Interest expense $ (12,662 ) $ (13,820 ) $ (3,489 ) $ (48,526 ) $ (13,334 )
 
GAAP Interest income $ 1,139 $ 1,110 $ 1,546 $ 4,399 $ 2,595
Acquisition, divestiture and restructure related adjustments D 102   128     949    
Non-GAAP Interest income $ 1,241 $ 1,238 $ 1,546 $ 5,348 $ 2,595
 
GAAP Other income (expense), net $ 2,589 $ (721 ) $ 5,777 $ (20,761 ) $ 11,929
Acquisition, divestiture and restructure related costs D (5,452 ) (1,966 ) (6,735 ) 11,800 (7,868 )
Non-operating (gains) losses F 1,996   393     2,535   (5,196 )
Non-GAAP Other income (expense), net $ (867 ) $ (2,294 ) $ (958 ) $ (6,426 ) $ (1,135 )
 
Non-GAAP Income before income taxes $ 98,648   $ 97,407   $ 71,262   $ 362,962   $ 232,113  
 
GAAP Provision for (benefit from) income taxes $ 14,117 $ 2,313 $ (205,114 ) $ 2,050 $ (191,412 )
Income tax effect of non-GAAP exclusions F (525 ) 11,233   219,352   55,458   237,776  
Non-GAAP Provision for income taxes $ 13,592   $ 13,546   $ 14,238   $ 57,508   $ 46,364  
Non-GAAP Income tax rate 13.8 % 13.9 % 20.0 % 15.8 % 20.0 %
 
GAAP Net (income) loss attributable to noncontrolling interests $ (904 ) $ (84 ) $ (71 ) $ (1,270 ) $ (292 )
Acquisition, divestiture and restructure related costs D (666 ) (563 )   (2,003 )  
Non-GAAP Net income attributable to noncontrolling interests $ (1,570 ) $ (647 ) $ (71 ) $ (3,273 ) $ (292 )
 
GAAP Net income attributable to VeriFone Systems, Inc. stockholders $ 26,985 $ 37,695 $ 198,826 $ 65,033 $ 282,404
Amortization of step-down in deferred revenue at acquisition A 3,287 4,169 4,936 20,478 5,644
Stock-based compensation E 10,382 12,445 9,036 44,554 34,144
Acquisition, divestiture and restructure related adjustments D 71 3,899 42,156 64,427 56,674
Amortization of purchased intangible assets D 33,931 33,759 17,317 124,263 33,987
Costs of efficiency initiatives F 1,552 1,552
Patent litigation loss contingency expense F 17,632
Non-cash interest expense F 3,151 2,087 4,034 15,559 15,576
Non-operating (gains) losses F 3,602 393 4,141 (5,196 )
Income tax effect of non-GAAP exclusions F 525   (11,233 ) (219,352 ) (55,458 ) (237,776 )
Non-GAAP Net income attributable to VeriFone Systems, Inc. stockholders $ 83,486 $ 83,214 $ 56,953 $ 302,181 $ 185,457
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
      Three Months Ended     Years Ended
Note October 31, 2012     July 31, 2012     October 31, 2011 October 31, 2012     October 31, 2011
Non-GAAP Net income per share attributable to VeriFone Systems, Inc. stockholders:
Basic $ 0.78   $ 0.77   $ 0.55   $ 2.82   $ 2.01  
Diluted G $ 0.76   $ 0.75   $ 0.53   $ 2.74   $ 1.92  
 
Weighted average shares used in computing earnings per share:
GAAP Basic shares 107,718 107,568 104,497 107,006 92,414
GAAP Diluted shares 110,342 110,384 108,339 110,315 96,616
Additional shares dilutive for non-GAAP G       (93 ) (104 )
Non-GAAP Diluted shares G 110,342 110,384 108,339 110,222 96,512
 
Net income attributable to VeriFone Systems, Inc. stockholders as a % of net revenues 5.6 % 7.7 % 48.4 % 3.5 % 21.7 %
Amortization of step-down in deferred revenue at acquisition as a % of net revenues 0.7 % 0.9 % 1.2 % 1.1 % 0.4 %
Stock-based compensation as a % of net revenues 2.1 % 2.5 % 2.2 % 2.4 % 2.6 %
Acquisition, divestiture and restructure related adjustments as a % of net revenues 0.0 % 0.8 % 10.3 % 3.5 % 4.3 %
Amortization of purchased intangible assets as a % of net revenues 7.0 % 6.9 % 4.2 % 6.7 % 2.6 %
Costs of efficiency initiatives as a % of net revenues 0.3 % 0.0 % 0.0 % 0.1 % 0.0 %
Patent litigation loss contingency expense as a % of net revenues 0.0 % 0.0 % 0.0 % 0.9 % 0.0 %
Non-cash interest expense as a % of net revenues 0.6 % 0.4 % 1.0 % 0.8 % 1.2 %
Non-operating (gains) losses as a % of net revenues 0.7 % 0.1 % 0.0 % 0.2 % (0.4 )%
Income tax effect of non-GAAP exclusions as a % of net revenues 0.1 % (2.3 )% (53.4 )% (3.0 )% (18.2 )%
Non-GAAP Net income attributable to VeriFone Systems, Inc. stockholders as a % of non-GAAP net revenues 17.1 % 16.9 % 13.7 % 16.0 % 14.2 %
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
                       
Three Months Ended Years Ended
Note October 31, 2012 July 31, 2012 October 31, 2011 October 31, 2012 October 31, 2011
GAAP net revenues:
International
EMEA $ 201,347 $ 199,992 $ 148,613 $ 755,187 $ 417,615
LAC 79,971 94,378 104,621 370,843 275,930
ASPAC 58,802   56,518   41,815   207,983   123,821  
Total International 340,120 350,888 295,049 1,334,013 817,366
North America 145,259   138,162   115,655   531,958   486,500  
Total $ 485,379   $ 489,050   $ 410,704   $ 1,865,971   $ 1,303,866  
 

Plus: non-GAAP net revenues adjustments

International
EMEA A $ 2,633 $ 3,421 $ 1,364 $ 16,282 $ 1,972
LAC A 344 344
ASPAC A 486   477   3,122   3,124   3,125  
Total International 3,119 3,898 4,830 19,406 5,441
North America A, D 59   271   106   963   203  
Total $ 3,178   $ 4,169   $ 4,936   $ 20,369   $ 5,644  
 
Non-GAAP net revenues:
International
EMEA A $ 203,980 $ 203,413 $ 149,977 $ 771,469 $ 419,587
LAC A 79,971 94,378 104,965 370,843 276,274
ASPAC A 59,288   56,995   44,937   211,107   126,946  
Total International 343,239 354,786 299,879 1,353,419 822,807
North America A 145,318   138,433   115,761   532,921   486,703  
Total $ 488,557   $ 493,219   $ 415,640   $ 1,886,340   $ 1,309,510  
 

Less: net revenues from businesses acquired in the past 12 months

International
EMEA B $ (60,381 ) $ (98,360 ) $ (6,942 ) $ (335,521 ) $ (23,057 )
LAC B (9,923 ) (41,761 )
ASPAC B   (19,476 )   (57,589 )  
Total International (60,381 ) (127,759 ) (6,942 ) (434,871 ) (23,057 )
North America B (3,959 ) (5,987 )   (25,137 )  
Total $ (64,340 ) $ (133,746 ) $ (6,942 ) $ (460,008 ) $ (23,057 )
 
VERIFONE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
                       
Three Months Ended Years Ended
Note October 31, 2012 July 31, 2012 October 31, 2011 October 31, 2012 October 31, 2011
Organic non-GAAP net revenues:
International
EMEA B $ 143,599 $ 105,053 $ 143,035 $ 435,948 $ 396,530
LAC B 79,971 84,455 104,965 329,082 276,274
ASPAC B 59,288   37,519   44,937   153,518   126,946
Total International 282,858 227,027 292,937 918,548 799,750
North America B 141,359   132,446   115,761   507,784   486,703
Total $ 424,217   $ 359,473   $ 408,698   $ 1,426,332   $ 1,286,453
 
Plus: constant currency adjustment
International
EMEA C $ 7,425 $ 6,893 $ 19,685
LAC C 7,119 6,433 17,666
ASPAC C 1,254   906   3,155  
Total International 15,798 14,232 40,506
North America C 74   195   298  
Total $ 15,872   $ 14,427   $ 40,804  
 
Organic non-GAAP net revenues at constant currency:
International
EMEA C $ 151,024 $ 111,946 $ 143,035 $ 455,633 $ 396,530
LAC C 87,090 90,888 104,965 346,748 276,274
ASPAC C 60,542   38,425   44,937   156,673   126,946
Total International 298,656 241,259 292,937 959,054 799,750
North America C 141,433   132,641   115,761   508,082   486,703
Total $ 440,089   $ 373,900   $ 408,698   $ 1,467,136   $ 1,286,453

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There will be 50 billion Internet connected devices by 2020. Today, every manufacturer has a propriety protocol and an app. How do we securely integrate these "things" into our lives and businesses in a way that we can easily control and manage? Even better, how do we integrate these "things" so that they control and manage each other so our lives become more convenient or our businesses become more profitable and/or safe? We have heard that the best interface is no interface. In his session at Internet of @ThingsExpo, Chris Matthieu, Co-Founder & CTO at Octoblu, Inc., will discuss how these devices generate enough data to learn our behaviors and simplify/improve our lives. What if we could connect everything to everything? I'm not only talking about connecting things to things but also systems, cloud services, and people. Add in a little machine learning and artificial intelligence and now we have something interesting...
Last week, while in San Francisco, I used the Uber app and service four times. All four experiences were great, although one of the drivers stopped for 30 seconds and then left as I was walking up to the car. He must have realized I was a blogger. None the less, the next car was just a minute away and I suffered no pain. In this article, my colleague, Ved Sen, Global Head, Advisory Services Social, Mobile and Sensors at Cognizant shares his experiences and insights.
We are reaching the end of the beginning with WebRTC and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will want to use their existing identities, but these will have credentials already that are (hopefully) irreversibly encoded. In his session at Internet of @ThingsExpo, Peter Dunkley, Technical Director at Acision, will look at how this identity problem can be solved and discuss ways to use existing web identities for real-time communication.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. It also ensured scalability and better service for customers, including MUY! Companies, one of the country's largest franchise restaurant companies with 232 Pizza Hut locations. This is one example of WebRTC adoption today, but the potential is limitless when powered by IoT. Attendees will learn real-world benefits of WebRTC and explore future possibilities, as WebRTC and IoT intersect to improve customer service.
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at Internet of @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, will share some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder of TeleStax, an Open Source Cloud Communications company that helps the shift from legacy IN/SS7 telco networks to IP-based cloud comms. An early investor in multiple start-ups, he still finds time to code for his companies and contribute to open source projects.
The Internet of Things (IoT) promises to create new business models as significant as those that were inspired by the Internet and the smartphone 20 and 10 years ago. What business, social and practical implications will this phenomenon bring? That's the subject of "Monetizing the Internet of Things: Perspectives from the Front Lines," an e-book released today and available free of charge from Aria Systems, the leading innovator in recurring revenue management.
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges.
There’s Big Data, then there’s really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at 6th Big Data Expo®, Hannah Smalltree, Director at Treasure Data, to discuss how IoT, Big Data and deployments are processing massive data volumes from wearables, utilities and other machines.
All major researchers estimate there will be tens of billions devices – computers, smartphones, tablets, and sensors – connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be!
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at Internet of @ThingsExpo, Erik Lagerway, Co-founder of Hookflash, will walk through the shifting landscape of traditional telephone and voice services to the modern P2P RTC era of OTT cloud assisted services.
While great strides have been made relative to the video aspects of remote collaboration, audio technology has basically stagnated. Typically all audio is mixed to a single monaural stream and emanates from a single point, such as a speakerphone or a speaker associated with a video monitor. This leads to confusion and lack of understanding among participants especially regarding who is actually speaking. Spatial teleconferencing introduces the concept of acoustic spatial separation between conference participants in three dimensional space. This has been shown to significantly improve comprehension and conference efficiency.
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, will discuss single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example to explain some of these concepts including when to use different storage models.
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual Controller™ Technology (SVCT) to eliminate the I/O blender effect and accelerate applications Gridstore delivers vmOptimized™ Storage that self-optimizes to each application or VM across both virtual and physical environments. Leveraging a grid architecture, Gridstore delivers the first end-to-end storage QoS to ensure the most important App or VM performance is never compromised. The storage grid, that uses Gridstore’s performance optimized nodes or capacity optimized nodes, starts with as few a...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace. These technological reforms have not only changed computers and smartphones, but are also changing the data processing model for all information devices. In particular, in the area known as M2M (Machine-To-Machine), there are great expectations that information with a new type of value can be produced using a variety of devices and sensors saving/sharing data via the network and through large-scale cloud-type data processing. This consortium believes that attaching a huge number of devic...
Innodisk is a service-driven provider of industrial embedded flash and DRAM storage products and technologies, with a focus on the enterprise, industrial, aerospace, and defense industries. Innodisk is dedicated to serving their customers and business partners. Quality is vitally important when it comes to industrial embedded flash and DRAM storage products. That’s why Innodisk manufactures all of their products in their own purpose-built memory production facility. In fact, they designed and built their production center to maximize manufacturing efficiency and guarantee the highest quality of our products.
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. Download Slide Deck: ▸ Here
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. Over the summer Gartner released its much anticipated annual Hype Cycle report and the big news is that Internet of Things has now replaced Big Data as the most hyped technology. Indeed, we're hearing more and more about this fascinating new technological paradigm. Every other IT news item seems to be about IoT and its implications on the future of digital business.
BSQUARE is a global leader of embedded software solutions. We enable smart connected systems at the device level and beyond that millions use every day and provide actionable data solutions for the growing Internet of Things (IoT) market. We empower our world-class customers with our products, services and solutions to achieve innovation and success. For more information, visit www.bsquare.com.
With the iCloud scandal seemingly in its past, Apple announced new iPhones, updates to iPad and MacBook as well as news on OSX Yosemite. Although consumers will have to wait to get their hands on some of that new stuff, what they can get is the latest release of iOS 8 that Apple made available for most in-market iPhones and iPads. Originally announced at WWDC (Apple’s annual developers conference) in June, iOS 8 seems to spearhead Apple’s newfound focus upon greater integration of their products into everyday tasks, cross-platform mobility and self-monitoring. Before you update your device, here is a look at some of the new features and things you may want to consider from a mobile security perspective.