VeriFone Systems, Inc (PAY)
Q1 2011 Earnings Call
March 01, 2011 4:30 pm ET
Doug Reed - Vice President, Treasurer and Executive officer of Investor Relations
Robert Dykes - Chief Financial Officer, Principal Accounting Officer and Senior Vice President
Douglas Bergeron - Chief Executive Officer and Executive Director
Tien-Tsin Huang - JP Morgan Chase & Co
Daniel Perlin - RBC Capital Markets, LLC
Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.
Darrin Peller - Barclays Capital
Gil Luria - Wedbush Securities Inc.
Previous Statements by PAY
» VeriFone Systems, Inc F2Q10 (Qtr End 04/30/2010) Earnings Call Transcript
» VeriFone Holdings, Inc. F1Q10 (01/31/10) Earnings Call Transcript
» VeriFone Holdings, Inc. F4Q09 (Qtr End 10/31/09) Earnings Call Transcript
Good afternoon, and welcome to the VeriFone Financial Results Conference Call for the First Quarter of Fiscal Year 2011. Today's call is being webcast, with both audio and slides available via the link in the Investor Relations area of our website, and a recording will be available on our website until March 8, 2011. With me today is our CEO, Doug Bergeron; and our CFO, Bob Dykes.
First, for the legalities. VeriFone desires to take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain forward-looking statements in this conference call, including management's view of future events and financial performance, are subject to various factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For a description of these factors, I refer you to our filings with the Securities and Exchange Commission, or SEC. Any forward-looking statements speak only as of today, and VeriFone is under no obligation to update these statements to reflect future events or circumstances.
In connection with the proposed Hypercom transaction, VeriFone has filed with the SEC a registration statement on Form S-4 that includes a proxy statement and prospectus relating to the proposed transaction. Investors are urged to read the Form S-4, proxy statement and prospectus and all amendments and supplements thereto and any other relevant documents filed with the SEC, because they contain important information about VeriFone, Hypercom and the proposed transaction. You can obtain copies of the S-4, proxy statement and prospectus, as well as VeriFone's other filings, free of charge at the website maintained by the SEC at www.sec.gov. In addition, you may obtain documents filed with the SEC by VeriFone free of charge by visiting our website, www.verifone.com, or by directing a request in writing to VeriFone, Attention: Investor Relations, 2099 Gateway Place, Suite 600, San Jose, California 95110, by phone to (408) 232-7979 or by e-mail to firstname.lastname@example.org. You may obtain documents filed with the SEC by Hypercom free of charge at Hypercom's website at www.hypercom.com or by directing a request in writing to Hypercom Corporation, Attention: Investor Relations, 8888 East Raintree Drive, Suite 300, Scottsdale, Arizona 85260, by phone to (480) 642-5000 or by e-mail to email@example.com.
In addition, today's call will cover certain non-GAAP financial measures on both historical and forecast basis. Our management uses these measures to evaluate our operating performance and to compare our results to those of prior periods, as well as to those of peer companies. These non-GAAP measures are not substitutes for disclosures made in accordance with GAAP. Reconciliations of these measures to the most comparable GAAP measures are presented in our earnings release, which is available on our website at verifone.com. [Operator Instructions]
Now I would like to turn the call over to Doug Bergeron, CEO of VeriFone.
Thanks, Doug, and good afternoon, everyone. We are very pleased with the results of our first quarter of fiscal year 2011. Our Q1 revenues of $284 million were once again the highest in the history of the company, a 27% increase over the previous year. This is the third straight quarter of mid-20% growth rate. We continue to see the benefits of our new business initiatives, as non-GAAP services revenue grew 65% in the first quarter over the same period last year and 22% sequentially.
Q1 is also the first quarter that services revenue as a percent of total revenues surpassed 20%, at 21%. Our non-GAAP gross margins for the quarter were at 41%, another milestone, and our cash balances grew to $479 million at quarter end, an increase of $34 million from the previous quarter. Non-GAAP earnings for the fourth quarter were $0.43 per share, 65% higher than the $0.26 per share results last year. Today, I will review our performance by region and follow with comments on our strategic initiatives, including the mobile payment space. Finally, I will turn the call over to Bob, who will provide a detailed review of the financials and update guidance.
VeriFone's first quarter revenues reflect strong results globally. North America revenues led the way with 43% year-over-year growth, and we saw double-digit growth in every one of our international regions. I'll talk more about our international results in a few minutes. But first, let's start with North America.
Each of our domestic segments performed well in the quarter, driven by ongoing upgrade and replacement dynamics, an improving economy and the impact of our transformational services initiatives. On a year-over-year basis, our petroleum revenues increased 30%. Demand continued to be strong in our direct channel to major oil companies and large independent marketers.