VeriFone Systems, Inc. (NYSE:PAY) Q1 2016 Earnings Conference Call - Final Transcript

Mar 10, 2016 • 04:30 pm ET


VeriFone Systems, Inc. (NYSE:PAY) Q1 2016 Earnings Conference Call - Final Transcript


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Good day, everyone, and welcome to the Q1 2016 Verifone Systems Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded.

At this time, I'd like to turn the conference call over to Mr. Doug Reed, Senior Vice President of Treasury and Investor Relations. Mr. Reed, please go ahead.

Doug Reed

Thank you, Jamie, and welcome, everyone, to the Verifone financial results conference call for the first quarter of fiscal year 2016. With me today in San Jose is our CEO, Paul Galant; our CFO, Marc Rothman; and our Global Head of Services, Vin D'Agostino. The recording of this call and the slides will be available on our Investor Relations website until March 31, 2016.

First, for the legalities, certain information you will hear on this conference call will consist of forward-looking statements, including management's view of future events and financial performance. These statements are subject to various factors, risks and uncertainties that could cause actual results to differ materially from our outlook. For more information, I refer you to our SEC filings, including today's earnings release and our most recent 10-K and 10-Q. 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.

Please note that, on today's call, we will refer to certain non-GAAP income statement items and other non-GAAP metrics. Reconciliations of these measures to the most comparable GAAP measures and other information regarding the non-GAAP measures are presented in our earnings release, which is available on our website at Please always refer to this information for a comprehensive review of our financial results.

Now, I would like to turn the call over to Paul Galant, CEO of Verifone.

Paul Galant

Thanks, Doug, and hello, everyone. This is our 11th consecutive quarter of results that prove that our team does what we say we're going to do. In Q1, we again outperformed and delivered $514 million of revenue, 5.5% growth year-over-year and 12% growth on an organic constant currency basis.

Our earnings per share were $0.48, a growth of 9% year-over-year. We outperformed in Q1 while investing approximately 10% of our revenues in R&D to run our business, expand our device families and to accelerate Verifone's move from a device vendor to a services provider. And even as we continue to invest, Verifone's operating margin in Q1 was 190 basis points better than it was just two years ago, and that's despite the continued intense FX headwinds. We also returned value to our shareholders through our stock buy-back program, completing 75% through the end of Q1.

Let me now cover three topics that we believe are of greatest interest to you: first, I want to talk about the global market growth for payment devices; second, I want to update you on progress in our services business; and third, I want to review our