Verifone Systems 8-K Results of Operations and Financial Condition

Financial Results for the

Third Quarter Ended

July 31, 2010

Exhibit 99.1

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

3

Non-GAAP Profit & Loss Overview

4

4

($ in thousands, except EPS)

Q309

Q210

Q310

% SEQ

Inc(Dec)

% YoY

Inc(Dec)

Revenue

211,371

240,712

261,455

8.6%

23.7%

Gross Margin

77,777

94,257

101,005

7.2%

29.9%

Gross Margin %

36.8%

39.2%

38.6%

Operating Expense

43,541

55,450

58,298

5.1%

33.9%

Operating Expense %

20.6%

23.0%

22.3%

Operating Profit

34,236

38,807

42,707

10.0%

24.7%

Operating Margin %

16.2%

16.1%

16.3%

Net Interest and Other

(3,622)

(3,707)

(2,803)

-24.4%

-22.6%

Pre-tax Profit

30,614

35,100

39,904

13.7%

30.3%

Taxes

8,572

9,828

7,981

-18.8%

-6.9%

Net Income

22,042

25,272

31,923

26.3%

44.8%

Net Income %

10.4%

10.5%

12.2%

EPS

0.26

0.29

0.36

24.1%

38.5%

Q310

Non-GAAP Revenue Profile

Services

18.5%

System

Solutions

81.5%

Q310

Revenue

LAC

20.2%

NA 

47.1%

Asia

8.9%

Europe

23.8%

5

5

($ in thousands)

Q309

Q210

Q310

% SEQ

Inc(Dec)

% YoY

Inc(Dec)

North America

89,034

105,940

123,211

16.3%

38.4%

Europe

67,148

66,538

62,120

-6.6%

-7.5%

Latin America

30,561

50,488

52,806

4.6%

72.8%

Asia

24,628

17,746

23,318

31.4%

-5.3%

Total

211,371

240,712

261,455

8.6%

23.7%

Q310

6

6

Media Solutions

•

Full motion video delivered to

captive audiences in taxis in

major markets.

•

Wall Street Journal Article

highlights Microsoft’s

successful advertising

campaign launching its

internet service offering,

BING -

Campaign used Taxi

Campaign used Taxi

TV Media platform.

TV Media platform.

http://online.wsj.com/article/SB100014240527487036364

04575353392678098382.html

Delivering messages via

engaging digital screens in

major markets.

Non-GAAP Revenue Profile

Services

18.5%

System

Solutions

81.5%

Q310

Revenue

LAC

20.2%

NA 

47.1%

Asia

8.9%

Europe

23.8%

7

7

($ in thousands)

Q309

Q210

Q310

% SEQ

Inc(Dec)

% YoY

Inc(Dec)

North America

89,034

105,940

123,211

16.3%

38.4%

Europe

67,148

66,538

62,120

-6.6%

-7.5%

Latin America

30,561

50,488

52,806

4.6%

72.8%

Asia

24,628

17,746

23,318

31.4%

-5.3%

Total

211,371

240,712

261,455

8.6%

23.7%

Q310

Average Time, Cost for PCI Compliance:

Allocation of PCI-Related Investments

Best-in-

Class

All

Others

Cost to achieve initial reporting of PCI compliance

US$520K

US$958K

Time to report initial compliance (months)

11

11

Annual cost to sustain PCI compliance

$135K

$300K

Average time since first reporting compliance (years)

2.0

2.3

Average total spend on PCI compliance

$784K

$1,642K

Build and Maintain a Secure Network

$197K

$375K

Protect Cardholder Data

$186K

$399K

Maintain a Vulnerability Management Program

$88K

$188K

Implement Strong Access Control Measures

$93K

$211K

Regularly Monitor and Test Networks

$124K

$317K

Maintain an Information Security Policy

$97K

$152K

Average Time, Total Spend on PCI Compliance

Source: Aberdeen Group, November 2009

8

8

Significant PCI Compliance Costs Drives Demand for VeriShield Protect

PAYware Mobile

•

Multiple Processor certifications in progress

•

Apple refining its micro-merchant sales strategy with “in-store

workshops”, featuring PAYware Mobile

•

PAYware Mobile ISO resellers grown by 60% since last quarter

Secure payment solutions for the iPhone and other smart phones

9

9

10

10

Corporate HQ

M-Retail

•

Content

•

Delivery

•

Marketing

•

Signage

•

Kiosks

•

MX-800

•

Taxis

•

M-Gift Card

•

M-Coupon

•

M-Loyalty

•

M-Payments

•

M-Ticketing

Client

Services

Services

•

Injection

•

Deployment

•

Installation

•

Help Desk

•

Repair

•

Training

•

On-Site

•

Projects

•

Downloads

Security

M-Retail

•

Content

•

Signage

•

Kiosks

•

MX800

•

Pump-Top TV

•

Taxis

Individual

Stores

Connect

Payment Devices

MX870

MX880

MX850

MX860

MX830

Payments

•

Credit

•

Debit

•

Gift

•

EBT

Payment Applications

•

Dial Terminals

•

Integrated Terminals

•

POS Software

•

Shopping Carts

•

Other Applications

•

Authorization

•

Settlement

•

Dial, SSL or IP

•

Ethernet

Mobile

M-Retail

•

M-Advertising

•

M-Marketing

•

M-Gift Card

•

M-Coupon

•

M-Loyalty

•

M-Ticketing

•

M-Purchasing

•

M-Payments

Processor 1

Processor 2

Processor 3

Etc.

Processors

PAYware

Connect –

Retail

Management Apps    

•

Asset Management

•

Terminal Downloads 

•

Remote Key Injection

•

Signature Capture

•

Estate Management

•

Gift Card

PCI Security

•

Remove POS

from Scope

•

VeriShield

Protect

•

VSDMS

•

No In-Store

Batches

•

Tokenization

11

11

Financial Results and

Guidance

Non-GAAP Gross Margin Review

12

12

Q309

Q210

Q310

System Solutions

35.6%

39.1%

37.4%

Services

44.5%

39.7%

44.3%

Total

36.8%

39.2%

38.6%

% of Revenue

Non-GAAP Operating Expenses

13

13

Q309

Q210

Q310

Research and Development

6.8%

7.3%

7.0%

Sales and Marketing

7.1%

8.5%

8.4%

G&A

6.7%

7.3%

6.9%

Total

20.6%

23.0%

22.3%

Non-GAAP Operating Expenses as

Reported ($M)

43.5

55.5

58.3

Non-GAAP Operating Expenses,

Constant Currency ($M)

43.9

54.9

58.3

% of Revenue

Cash Flow and Balance Sheet

14

14

($ in thousands, except Days)

$

$

$

Cash Flow from Operations before

Changes in Working Capital

35,674

36,024

36,662

Cash Flow from Operations

57,792

21,885

25,994

Key Balance Sheet Items:

Cash

254,812

378,988

400,462

Accounts Receivables, net

176,069

78

145,649

57

137,705

49

Accounts Receivables Reserves

(4,667)

(4,074)

(4,671)

Inventories, net

98,480

66

110,103

63

111,415

62

Inventories Reserves

(38,254)

(26,113)

(22,332)

Accounts Payable

74,813

51

99,008

61

71,252

40

Deferred Revenue, net

63,937

68,478

71,981

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.

Q310

Days

Days

Q210

Days

Q309

Guidance

•

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

between $984 million and $989 million.  Non-GAAP net income per

share is projected to be in the range of $1.26 to $1.27 for the same

time period.

•

For the fourth quarter ending October 31, 2010, VeriFone expects

net revenues to be between $258 million and $263 million.  Non-

GAAP net income per share is projected to be in the range of $0.35

to $0.36.

15

15

16

16

Financial Results for the

Third Quarter Ended

July 31, 2010