Verifone Systems 8-K VeriFone Reports Second Quarter Fiscal 2007 Results

EXHIBIT 99.1

Investor Contact:
William Nettles — Director
Corporate Development & IR
Tel: 408-232-7979
Email: ir@verifone.com

Editorial Contact:
Pete Bartolik
VeriFone, Inc.
Tel: 508-283-4112
Email: pete_bartolik@verifone.com

VeriFone Reports
Second Quarter Fiscal 2007 Results

Revenues of $217 million grew 53% due
to Lipman acquisition and resurgent North American Growth

Record EBITDA, as adjusted, margins of 26.3%

EPS, as adjusted, increases 50% to 39 cents

SAN JOSE, CA — May 29, 2007 — VeriFone Holdings, Inc. (NYSE: PAY), the global leader in secure electronic payment solutions, today announced financial results for the three months ended April 30, 2007.

     Net revenues, for the three months ended April 30, 2007, were $217.2 million, 53% higher than the net revenues of $142.2 million for the comparable period of 2006. VeriFone’s International business increased 97% and VeriFone’s North America business increased 19%. The significant increase in sales was driven largely by the acquisition of Lipman, which closed November 1, 2006.

     Subsequent to the end of the quarter, management determined that booked orders of approximately $4 million could not be recognized as revenue due to incomplete sales administration requirements in our international operations. These orders were largely sourced from VeriFone’s new Israeli and Turkish facilities and all were headed to high growth markets in Asia, Eastern Europe and Africa. The Company is confident that the shortcomings in applying these field processes have now been remedied. All of this revenue has now been fully recognized and is reflected in guidance for the third quarter.

     Gross margins, excluding non-cash acquisition related charges and stock-based compensation expense, expanded to a record 48.1%, for the three months ended April 30, 2007, compared to 45.7% for the comparable period

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of 2006. GAAP gross margins for the three months ended April 30, 2007, were 41.5%, compared to 44.6% for the three months ended April 30, 2006, as a result of increased amortization of purchased technology assets, the step-up in inventory and stock-based compensation.

     GAAP operating expenses for the three months ended April 30, 2007, were $72.9 million compared to $37.8 million for the comparable period of 2006. In addition to the effect of the Lipman acquisition and related integration expenses, the Company incurred higher non-cash stock compensation expenses and amortization of purchased intangible assets. Stock based compensation for the three months ended April 30, 2007 was $9.8 million compared to $1.0 million for the comparable period of 2006. This increase was primarily due to the acceleration of the vesting of options of Lipman executives, the increase in the number of option holders following the Lipman acquisition and the grant of performance-based restricted stock units to the Company’s Chief Executive Officer. Amortization of purchased intangible assets for the three months ended April 30, 2007 was $6.1 million compared to $1.2 million for the comparable period of 2006, primarily due to the Lipman acquisition.

     EBITDA, as adjusted, margins for the three months ended April 30, 2007, expanded for the eleventh consecutive quarter and reached a record level of 26.3%, compared to the 21.6% recorded in the three months ended April 30, 2006.

     GAAP EPS for the three months ended April 30, 2007, was $0.06 per diluted share, compared to $0.22 per diluted share, for the comparable period of fiscal 2006, due to acquisition related non-cash charges, higher stock-based compensation expense primarily related to the Lipman acquisition and to a significantly higher GAAP tax rate driven by an increase in the valuation allowance related to Lipman. Net income, as adjusted, which excludes non-cash acquisition related charges and debt issuance costs, as well as non-cash stock-based compensation expense and Lipman integration costs, for the three months ended April 30, 2007, increased 50% to $0.39 per diluted share,

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compared to $0.26 per diluted share, for the three months ended April 30, 2006.

     “I am pleased to report on another very successful quarter for VeriFone as we once again achieved record profitability,” said Douglas G. Bergeron, Chairman and Chief Executive Officer. “During the quarter, our record margins drove our robust EPS growth, and also resulted in strong cash flow,” continued Bergeron. “We were especially pleased with our continuing success of our wireless products and were delighted with the resurgence of our North American business which grew sequentially 8 percent from the previous quarter.”

     “Based on these results and the $4 million of revenue which has been recognized in the third quarter, we are increasing our third quarter internal expectations for net revenue to $225 - $227 million and increasing our guidance for net income, as adjusted, per share to a range of $0.39 - $0.40. We remain confident of our prospects for the remainder of fiscal 2007.”

	Second Quarter Highlights
•	In the UK, VeriFone had continued success with the Tesco contract, where the VeriFone Secura outdoor payment system is enabling easy integration with ECRs, pumps and a range of unattended devices in a Wincor Nixdorf-led project.
•	In Mexico, VeriFone completed a successful pilot with American Express for its Vx 670 Pay at the Table solution and looks forward to demand creation from the related American Express advertising campaign.
•	VeriFone announced wins at Ahold Group members Stop & Shop and Giant-Landover food stores. These organizations have embraced a strategy to install MX870’s in all new and remodeled stores as well as to replace legacy products over time. In addition, VeriFone also

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announced other significant wins including Wegman’s Food Markets, a high end supermarket in the northeast US region, which began its rollout of the MX870 with RFID to replace a competitive product; and Brookshires Grocery, a Texas based supermarket chain, which passed the Texas WIC certification and began a chain wide rollout with the MX870.

Note: The Company’s second quarter results reflect the November 1, 2006 acquisition of Lipman and, because of the integration of Lipman’s products and distribution channels as well as the lack of comparable quarter ends of VeriFone and Lipman, are compared to pre-acquisition results of prior fiscal periods.

Financial Measures

     Reconciliations for the non-GAAP measures presented in this press release are provided at the end of this press release. Management uses the non-GAAP measures presented in this release to help them evaluate VeriFone’s performance and to compare VeriFone’s current results with those for prior periods as well as with the results of other companies in our industry, but cautions investors that these non-GAAP measures should not be considered as substitutes for disclosures made in accordance with GAAP.

Conference Call

     The management of VeriFone will host a conference call, which will be simultaneously webcast, on May 29, 2007, at 1:30 p.m. (PST) to discuss VeriFone’s second quarter results. Management may also provide forward looking guidance on this call. To access the live conference call, the dial-in numbers are as follows:

     Domestic callers: [800-510-9661]

     International callers: [617-614-3452]

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     Passcode: [16987138]

     To access the audio webcast, please go to VeriFone’s website (http://ir.verifone.com) at least ten minutes prior to the call to register. The recorded audio webcast will be available on VeriFone’s website until June 5, 2007.

     A replay of the conference call, which can be accessed by dialing toll-free [888-286-8010], and outside the U.S. [617-801-6888], will be available until June 5, 2007. The access code for the replay is [34567432].

-ends-

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

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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 are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the 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 Holdings, Inc. These risks and uncertainties include: our ability to identify and complete acquisitions and strategic investments and successfully integrate them into our business, our ability to protect against fraud; the status of our relationship with and condition of third parties upon whom we rely in the conduct of our business, our dependence on a limited number of customers, uncertainties related to the conduct of our business 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. For a further list and description of such risks and uncertainties, 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.

VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)

	Three Months Ended April 30,									Six Months Ended April 30,
	2007			2006			Change			2007			2006			Change
	(unaudited)
Net revenues:
System Solutions	$	191,800		$	128,136			50	%	$	381,029		$	246,821			54	%
Services		25,413			14,054			81			52,810			29,999			76
Total net revenues		217,213			142,190			53			433,839			276,820			57
Cost of net revenues:
System Solutions		104,548			70,346			49			217,591			135,868			60
Amortization of purchased core and developed technology asset		9,562			1,419		nm				19,168			3,012		nm
Total cost of System Solutions net revenues		114,110			71,765			59			236,759			138,880			70
Services		12,903			7,026			84			25,500			14,939			71
Total cost of net revenues		127,013			78,791			61			262,259			153,819			70
Gross profit		90,200			63,399			42			171,580			123,001			39
Operating expenses:
Research and development		16,238			12,221			33			33,044			23,628			40
Sales and marketing		23,323			14,404			62			45,846			28,605			60
General and administrative		27,181			9,993			172			45,586			19,691			132
Amortization of purchased intangible assets		6,061			1,159		nm				11,389			2,318		nm
In-process research and development		110			—		nm				6,640			—		nm
Total operating expenses		72,913			37,777			93			142,505			74,242			92
Operating income		17,287			25,622			-33			29,075			48,759			-40
Interest expense		(9,595	)		(3,197	)		200			(19,351	)		(6,476	)		199
Interest income		1,553			927			68			2,525			1,614			56
Other income and expense, net		106			65			63			(31	)		266			-112
Income before income taxes		9,351			23,417			-60			12,218			44,163			-72
Provision for income taxes		4,492			8,381			-46			8,343			15,333			-46
Net income	$	4,859		$	15,036			-68	%	$	3,875		$	28,830			-87	%
Net income per share:
Basic	$	0.06		$	0.23					$	0.05		$	0.44
Diluted	$	0.06		$	0.22					$	0.05		$	0.42
Weighted-average shares used in computing net income per common share:
Basic		81,705			65,799						81,343			65,751
Diluted		84,180			68,959						83,861			68,887

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ADDITIONAL CONSOLIDATED STATEMENTS OF OPERATIONS DISCLOSURES
(IN THOUSANDS, EXCEPT PERCENTAGES)

	Three Months Ended						Six Months Ended
	April 30,						April 30,
	2007			2006			2007			2006
	(unaudited)
GAAP net revenue	$	217,213		$	142,190		$	433,839		$	276,820
Gross profit as reported		90,200			63,399			171,580			123,001
Amortization of purchased core and developed technology assets		9,562			1,419			19,168			3,012
Amortization of step-up in inventory on acquisition		3,429			—			13,732			—
Stock-based compensation		1,191			162			1,964			315
Gross profit excluding amortization of purchased core and developed technology assets, other non-cash acquisition cost and stock-based compensation	$	104,382		$	64,980		$	206,444		$	126,328
As a percentage of net revenues:
Gross profit as reported		41.5	%		44.6	%		39.5	%		44.4	%
Gross profit excluding amortization of purchased core and developed technology assets and stock-based compensation		48.1	%		45.7	%		47.6	%		45.6	%

	Three Months Ended				Six Months Ended
	April 30,				April 30,
	2007		2006		2007		2006
	(unaudited)
Stock-based compensation included above:
Cost of net revenues — System Solutions	$	1,191	$	162	$	1,964	$	315
Research and development		1,887		210		3,036		390
Sales and marketing		2,004		409		3,495		740
General and administrative		5,919		408		9,982		667
	$	11,001	$	1,189	$	18,477	$	2,112

(1)	“nm” means not meaningful
(2)	Management uses gross profit excluding non-cash acquisition related charges and stock-based compensation, a non-GAAP measure, to evaluate the Company’s gross profit and to compare the Company’s current results with those of prior periods, but cautions that it should not be considered as a substitute for disclosures made in accordance with GAAP.

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VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

	April 30,		October 31,
	2007		2006
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	175,760	$	86,564
Accounts receivable, net of allowances of $3,747 and $2,364		168,375		119,839
Inventories		125,390		86,631
Other current assets		48,017		26,210
Total current assets		517,542		319,244
Property, plant and equipment		36,236		7,300
Purchased intangible assets, net		199,517		16,544
Goodwill		549,073		52,689
Other assets		74,733		57,168
Total assets	$	1,377,101	$	452,945
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	72,566	$	66,685
Income taxes payable		4,573		5,951
Deferred revenue, net		36,175		23,567
Other current liabilities		93,017		54,480
Current portion of long-term debt		5,416		1,985
Total current liabilities		211,747		152,668
Deferred revenue		9,807		7,371
Long-term debt, less current portion		494,036		190,904
Other long-term liabilities		82,697		3,261
Minority interest		5,632		—
Total stockholders’ equity		573,182		98,741
Total liabilities and stockholders’ equity	$	1,377,101	$	452,945

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VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Six Months Ended
	April 30,
	2007			2006
	(Unaudited)
Cash flows from operating activities
Net income	$	3,875		$	28,830
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of purchased intangibles		30,557			5,330
Depreciation and amortization of property, plant and equipment		3,765			1,651
Amortization of capitalized software		570			598
In-process research and development		6,640			—
Amortization of interest rate caps		—			139
Amortization of debt issuance costs		660			539
Stock-based compensation		18,477			2,112
Minority interest		26			—
Other		9			(81	)
Net cash provided by operating activities before changes in working capital		64,579			39,118
Changes in operating assets and liabilities:
Accounts receivable, net		(13,135	)		(19,639	)
Inventories		24,477			(14,450	)
Deferred tax assets		(559	)		(1,871	)
Prepaid expenses and other current assets		(18,803	)		(607	)
Other assets		527			42
Accounts payable		(9,597	)		17,096
Income taxes payable		1,800			4,593
Tax benefit from stock-based compensation		(4,681	)		(1,374	)
Accrued compensation		(2,541	)		(621	)
Accrued warranty		(1,199	)		(674	)
Deferred revenue		5,532			5,133
Deferred tax liabilities		5,170			—
Accrued expenses and other liabilities		(2,610	)		(2,083	)
Net cash provided by operating activities		48,960			24,663
Cash flows from investing activities
Software development costs capitalized		(2,923	)		(1,078	)
Purchase of property, plant and equipment		(12,479	)		(2,161	)
Purchase of other assets		—			(1,114	)
Purchases of marketable securities		—			(102,508	)
Sales and maturities of marketable securities		—			106,625
Acquisition of business, net of cash and cash equivalents acquired		(274,270	)		—
Net cash used in investing activities		(289,672	)		(236	)
Cash flows from financing activities
Proceeds from long-term debt, net of costs		304,950			—
Repayment of long-term debt		—			(925	)
Repayments of capital leases		(4	)		(106	)
Tax benefit of stock-based compensation		4,681			1,374
Proceeds from exercises of stock options and other		18,570			593
Net cash provided by financing activities		328,197			936
Effect of foreign currency exchange rate changes on cash		1,711			790
Net increase in cash and cash equivalents		89,196			26,153
Cash and cash equivalents, beginning of period		86,564			65,065
Cash and cash equivalents, end of period	$	175,760		$	91,218
Supplemental disclosures of cash flow information
Cash paid for interest	$	18,047		$	5,875
Cash paid for taxes	$	13,381		$	13,289
Supplemental schedule of non-cash transactions:
Issuance of common stock and stock options for business acquisition	$	430,318		$	—

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SUPPLEMENTAL DATA
 
VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)

	Three Months Ended April 30,									Six Months Ended April 30,
	2007			2006			Change			2007			2006			Change
GAAP net income	$	4,859		$	15,036			-68	%	$	3,875		$	28,830			-87	%
Provision for income taxes		4,492			8,381			-46			8,343			15,333			-46
Income before income taxes		9,351			23,417			-60			12,218			44,163			-72
Interest expense excluding acquisition related charges		9,057			3,197			183			18,534			6,476			186
Interest income		(1,553	)		(927	)		68			(2,525	)		(1,614	)		56
Depreciation and amortization of equipment and improvements		1,693			877			93			3,765			1,651			128
Amortization of capitalized software		275			323			-15			570			598			-5
Amortization of purchased intangible assets		15,623			2,578		nm				30,557			5,330		nm
Amortization of step-down in deferred revenue on acquisition		922			121		nm				2,436			323		nm
Amortization of step-up in inventory on acquisition		3,429			—		nm				13,732			—		nm
In-process research and development		110			—		nm				6,640			—		nm
Stock-based compensation		11,001			1,189		nm				18,477			2,112		nm
Acquisition related charges and restructuring costs		7,162			—		nm				8,235			—		nm
EBITDA as adjusted	$	57,070		$	30,775			85	%	$	112,639		$	59,039			91	%
% of revenue		26.3	%		21.6	%		21			26.0	%		21.3	%		22
GAAP net income	$	4,859		$	15,036			-68	%	$	3,875		$	28,830			-87	%
Amortization of purchased intangible assets		15,623			2,578		nm				30,557			5,330		nm
Amortization of step-down in deferred revenue on acquisition		922			121		nm				2,436			323		nm
Amortization of step-up in inventory on acquisition		3,429			—		nm				13,732			—		nm
In-process research and development		110			—		nm				6,640			—		nm
Stock-based compensation		11,001			1,189		nm				18,477			2,112		nm
Amortization of debt issuance costs		332			273			22			660			539			22
Acquisition related charges and restructuring costs		7,162			—		nm				8,235			—		nm
Total adjustments		38,579			4,161		nm				80,737			8,304		nm
Tax effect of adjustments		10,802			1,332		nm				22,606			2,657		nm
Estimated long term tax rate		28.0	%		32.0	%		nm			28.0	%		32.0	%		nm
		27,777			2,829		nm				58,131			5,647		nm
Valuation allowance on IPR&D		—			—		nm				1,782			—		nm
Adjustments after tax		27,777			2,829		nm				59,913			5,647		nm
Net Income as Adjusted	$	32,636		$	17,865			83	%	$	63,788		$	34,477			85	%
% of net revenue		15.0	%		12.6	%		20	%		14.7	%		12.5	%		18	%
Net Income as Adjusted per diluted share	$	0.39		$	0.26			50	%	$	0.76		$	0.50			52	%
Weighted-average shares used in computing diluted net income as adjusted per common share		84,180			68,959						83,861			68,887

(1)	“nm” means not meaningful
(2)	Management uses EBITDA as Adjusted and Net Income as Adjusted, both non-GAAP measures to evaluate the Company’s operating performance and compare the Company’s current results with those for prior periods, but cautions that they should not be considered as substitutes for disclosures made in accordance with GAAP.
(3)	The tax effect of in-process research and development is treated as a discrete item resulting in an increase in the non-cash valuation allowance and tax rate for the six month ending April 30, 2007.

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VERIFONE HOLDINGS, INC. AND SUBSIDIARIES
GEOGRAPHIC REVENUE INFORMATION
(IN THOUSANDS, EXCEPT PERCENTAGES)

	Three Months Ended April 30,									Six Months Ended April 30,
	2007			2006			Change			2007			2006			Change
North America	$	96,040		$	80,466			19	%	$	185,110		$	157,641			17	%
Latin America		41,497			26,529			56			82,168			50,445			63
Europe		68,975			26,151			164			140,383			49,200			185
Asia		11,623			9,165			27			28,614			19,857			44
Corporate		(922	)		(121	)		nm			(2,436	)		(323	)		nm
	$	217,213		$	142,190			53	%	$	433,839		$	276,820			57	%

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VERIFONE HOLDINGS, INC.
RECONCILIATION OF GUIDANCE FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE AND NET INCOME
(In $ million, except per share data; unaudited)

	Three months ending July 31, 2007
	Non-GAAP								GAAP
	Range of Estimates							Range of Estimates
	From		To		Adjustments			From		To
Net income	$	32.6	$	33.4		($19.4	)[a]	$	13.2	$	14.0
Net income per share — diluted	$	0.39	$	0.40				$	0.16	$	0.17
Shares used to compute net income per share (millions)		84.4		84.4					84.4		84.4

[a]    Reflects estimated adjustments as follows:		Before Tax		After Tax
				@28%
(i)	Amortization of purchased intangible assets	$	15.4	$	11.1
(ii)	Stock-based compensation		7.5		5.4
(iii)	Acquisition related charges		3.0		2.2
(iv)	Amortization of step-down in deferred revenue		0.7		0.5
(v)	Amortization of debt issuance costs		0.3		0.2
	Total adjustments	$	26.9	$	19.4

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