Verifone Systems 8-K Results of Operations and Financial Condition

1

1

Financial Results for the

Second Quarter Ended

April 30, 2010

Exhibit 99.1

Forward-Looking Statements

Today’s

discussion

may

include

“forward-looking

statements”

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995.

Such

statements relate to future events and expectations and involve known

and unknown risks and uncertainties. VeriFone’s actual results or

actions may differ materially from those projected in the forward-looking

statements. For a summary of the specific risk factors that could cause

results to differ materially from those expressed in the forward-looking

statements, please refer to VeriFone’s filings with the Securities and

Exchange Commission, including its annual report on Form 10-K and

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.

2

Non-GAAP Financial Measures

With respect to any Non-GAAP financial measures presented in the

information, reconciliations of Non-GAAP to GAAP financial measures

may be found in VeriFone’s quarterly earnings release as filed with the

Securities and Exchange Commission. 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 to compare VeriFone’s current results with those for

prior periods as well as with the results of peer companies. 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.

3

Non-GAAP Profit & Loss Overview

4

4

($ in thousands, except EPS)

Q209

Q110

Q210

% SEQ

Inc(Dec)

Revenue

201,684

223,400

240,712

7.7%

19.4%

Gross Margin

68,221

87,631

94,257

7.6%

38.2%

Gross Margin %

33.8%

39.2%

39.2%

Operating Expense

44,841

51,911

55,450

6.8%

23.7%

Operating Expense %

22.2%

23.2%

23.0%

Operating Profit

23,380

35,720

38,807

8.6%

66.0%

Operating Margin %

11.6%

16.0%

16.1%

Net Interest and Other

(3,967)

(4,451)

(3,707)

-16.7%

-6.6%

Pre-tax Profit

19,413

31,269

35,100

12.3%

80.8%

Taxes

5,436

8,755

9,828

12.3%

80.8%

Net Income

13,977

22,514

25,272

12.3%

80.8%

Net Income %

6.9%

10.1%

10.5%

EPS

0.17

0.26

0.29

11.5%

70.6%

Q210

% YoY 

Inc(Dec)

Non-GAAP Revenue Profile

Services

17.1%

System

Solutions

82.9%

Q210

Revenue

5

LAC

21.0%

NA 

44.0%

Asia

7.4%

Europe

27.6%

($ in thousands)

Q209

Q110

Q210

% SEQ

Inc(Dec)

North America

83,444

89,613

105,940

18.2%

27.0%

Europe

63,773

69,374

66,538

-4.1%

4.3%

Latin America

40,339

40,623

50,488

24.3%

25.2%

Asia

14,128

23,790

17,746

-25.4%

25.6%

Total

201,684

223,400

240,712

7.7%

19.4%

Q210

% YoY

Inc(Dec)

6

6

Vx

Evolution:  Our Principles and Initial Offerings

Countertop

500 series

Portable

600 series

Consumer Facing

800 series

VX 820

VX 520

VX 820

DUET

VX 680

VeriShield

Protect Channel Support Growing

7

7

8

8

Announcing VeriFone PED Authentication Service

Extending The Security Perimeter

•

PIN entry device breaches have become highly coordinated with

criminals

now

attacking

on

all

fronts

--

network,

device,

and

now

the

retail

environment

•

Criminals are stealing devices, installing bugs that capture sensitive data

and

switching

out

devices

with

seemingly

identical

models

–

all

without

the retailer’s knowledge

•

VeriFone

has

developed

an

innovative

solution

–

VeriFone

PED

Authentication

Service

(VPAS)

--

that

adds

another

layer

of

protection

to

the industry’s widest portfolio of secure payment solutions

“These incidents are part of an ongoing trend

where criminals are targeting non-PCI and PED-

compliant point-of-sale terminals with devices

installed to capture cardholder data.”

Mike Urban, Senior Director of Fraud Solutions at FICO

PAYware

Mobile

–

Direct

Sales

Enterprises

Effortless, Wireless

•

Quickly turns the iPhone

into a robust payment

device

•

Complete solution

(payment app + reader)

•

Eliminates human error

from manual entry

•

Easily captures

signatures

Rock Solid

Freedom

Trust the payment leader for the most solid,

secure payment solution for iPhones

Direct

Sales

Enterprises

see

PAYware

Mobile

as

an

opportunity

to

increase sales, decrease the costs of card acceptance, and achieve PCI

compliance

9

9

PAYware

Connect –

Retail

10

10

M-Retail

•

Content

•

Signage

•

Kiosks

•

MX800

•

Pump-Top TV

•

Taxis

M-Retail

•

Content

•

Delivery

•

Marketing

•

Signage

•

Kiosks

•

MX-800

M-Retail

•

M-Advertising

•

M-Marketing

•

M-Gift Card

•

M-Coupon

•

M-Loyalty

•

M-Ticketing

•

M-Purchasing

•

M-Payments

PCI Security

•

Remove POS

from Scope

•

VeriShield

Protect

•

VSDMS

•

No In-Store

Batches

•

Tokenization

Management Apps    

•

Asset Management

•

Terminal Downloads 

•

Remote Key Injection

•

Signature Capture

•

Estate Management

•

Gift Card

Services

•

Injection

•

Deployment

•

Installation

•

Help Desk

•

Repair

•

Training

•

On-Site

•

Projects

•

Downloads

Payments

•Credit

•Debit

•Gift

•EBT

Payment Applications

•

Dial Terminals

•

Integrated Terminals

•

POS Software

•

Shopping Carts

•

Other Applications

•

Authorization

•

Settlement

•

Dial, SSL or IP

•

Ethernet

MX870

MX880

MX850

MX860

MX830

Payment Devices

Mobile

Processor 1

Processor 2

Processor 3

Etc.

Processors

Connect

Security

Client

Services

Corporate HQ

Individual

Stores

•

Taxis

•

M-Gift Card

•

M-Coupon

•

M-Loyalty

•

M-Payments

•

M-Ticketing

Financial Results and

Guidance

11

11

Non-GAAP Gross Margin Review

12

12

Q209

Q110

Q210

System Solutions

31.6%

39.0%

39.1%

Services

47.4%

40.5%

39.7%

Total

33.8%

39.2%

39.2%

% of Revenue

Non-GAAP Operating Expenses

13

13

Q209

Q110

Q210

Research and Development

6.8%

7.2%

7.3%

Sales and Marketing

7.5%

8.3%

8.5%

G&A

7.9%

7.7%

7.3%

Total

22.2%

23.2%

23.0%

Non-GAAP Operating Expenses as

Reported ($M)

44.8

51.9

55.5

Non-GAAP Operating Expenses,

Constant Currency ($M)

46.8

51.6

55.5

% of Revenue

Cash Flow and Balance Sheet

14

14

($ in thousands, except Days)

$

$

$

Cash Flow from Operations before

Changes in Working Capital

19,773

34,324

36,024

Cash Flow from Operations

62,459

54,109

18,569

Key Balance Sheet Items:

Cash

201,306

374,617

378,988

Accounts Receivables, net

165,980

77

152,471

64

145,649

57

Accounts Receivables Reserves

(5,021)

(3,813)

(4,074)

Inventories, net

105,641

81

94,496

63

110,103

63

Inventories Reserves

(40,684)

(29,485)

(26,113)

Accounts Payable

61,118

41

88,194

58

99,008

61

Deferred Revenue, net

61,088

66,366

68,478

Note:      Accounts Receivable Days Sales Outstanding is calculated based on Gross Accounts Receivable Net

of Reserve for Product Returns.

Days in Inventory is calculated as Average Net Inventory divided by Total Cost of Goods Sold.

Days in Accounts Payable is calculated as Accounts Payable divided by Total Cost of Goods Sold.

Days

Q210

Days

Q110

Days

Q209

Guidance

•

For the third quarter ending July 31, 2010, VeriFone expects net

revenues to be between $245 million and $250 million.  Non-GAAP

net income per share is projected to be in the range of $0.29 to

$0.30.

•

For the full year of fiscal 2010, VeriFone expects net revenues to be

between $960 million and $970 million.  Non-GAAP net income per

share is projected to be in the range of $1.12 to $1.15 for the same

time period.

15

15

16

16

Financial Results for the

Second Quarter Ended

April 30, 2010