Verifone Systems 8-K Results of Operations and Financial Condition

Financial Results for the

Quarter Ended January 31,

2011

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

2

Important Information

   In connection with the proposed Hypercom transaction, VeriFone has filed with

the Securities and Exchange Commission (“SEC”) a registration statement on

Form S-4 that includes a proxy statement/prospectus relating to the proposed

transaction.  Investors are urged to read the form S-4 and proxy

statement/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 and proxy statement/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, CA 95110, by phone to (408) 232-7979

or by e-mail to ir@verifone.com.  You may obtain documents filed with the

SEC by Hypercom free of charge at Hypercom’s website (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 stsujita@hypercom.com.

3

3

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.

4

4

Non-GAAP Profit & Loss Overview

5

5

($ in thousands, except EPS)

Q110

Q410

Q111

% SEQ

Inc(Dec)

% YoY 

Inc(Dec)

Revenue

223,400

276,000

283,940

2.9%

27.1%

Gross Margin

87,631

110,262

116,944

6.1%

33.5%

Gross Margin %

39.2%

40.0%

41.2%

Operating Expense

51,911

61,697

63,990

3.7%

23.3%

Operating Expense %

23.2%

22.4%

22.5%

Operating Profit

35,720

48,565

52,954

9.0%

48.2%

Operating Margin %

16.0%

17.6%

18.6%

Net Interest and Other

(4,451)

(3,388)

(3,529)

4.2%

-20.7%

Pre-tax Profit

31,269

45,177

49,425

9.4%

58.1%

Taxes

8,755

9,035

9,885

9.4%

12.9%

Net Income

22,514

36,142

39,540

9.4%

75.6%

Net Income %

10.1%

13.1%

13.9%

EPS

0.26

0.40

0.43

7.5%

65.4%

Q111

6

6

Non-GAAP Revenue Profile

Services

20.5%

System

Solutions

79.5%

Q111 Revenue

LAC

17.7%

NA 

45.2%

Asia

9.4%

Europe

27.7%

($ in thousands)

Q110

Q410

Q111

% SEQ

Inc(Dec)

% YoY 

Inc(Dec)

North America

89,613

122,139

128,479

5.2%

43.4%

Europe

69,374

70,165

78,707

12.2%

13.5%

Latin America

40,623

53,887

50,131

-7.0%

23.4%

Asia

23,790

29,809

26,623

-10.7%

11.9%

Total

223,400

276,000

283,940

2.9%

27.1%

Q111

PAYware Mobile Enterprise

•

Selected as Top 5 New Technology for

2011 by National Retail Federation

•

Securely Enables Multiple New Mobile Services for Large Retailers

–

Roaming POS

–

Personal Shopping

–

Out of Store Sales

–

Inventory Control

–

Loyalty Programs

•

PCI-Approved Mobile Solution Incorporating End-to-End Encryption

and Tokenization for Use with Smart Mobile Devices

7

7

Financial Results and

Guidance

8

8

Non-GAAP Gross Margin Review

9

9

Q110

Q410

Q111

System Solutions

39.0%

38.7%

40.1%

Services

40.5%

46.0%

45.3%

Total

39.2%

40.0%

41.2%

% of Revenue

Non-GAAP Operating Expenses

10

10

Q110

Q410

Q111

Research and Development

7.2%

7.1%

7.3%

Sales and Marketing

8.3%

8.7%

8.8%

G&A

7.7%

6.6%

6.4%

Total

23.2%

22.4%

22.5%

Non-GAAP Operating Expenses as

Reported ($M)

51.9

61.7

64.0

Non-GAAP Operating Expenses,

Constant Currency ($M)

52.2

62.3

64.0

% of Revenue

Cash Flow and Balance Sheet

11

11

($ in thousands, except Days)

$

$

$

Cash Flow from Operations before

Changes in Working Capital

34,324

51,716

50,800

Cash Flow from Operations

55,316

54,038

30,409

Key Balance Sheet Items:

Cash

374,617

445,137

479,167

Accounts Receivables, net

152,471

64

132,988

46

164,830

54

Accounts Receivables Reserves

(3,813)

(5,862)

(5,771)

Inventories, net

94,496

63

111,901

61

112,084

60

Inventories Reserves

(29,485)

(23,257)

(27,294)

Accounts Payable

88,194

58

64,016

35

77,596

42

Deferred Revenue, net

66,366

77,607

78,494

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.

Q111

Days

Q110

Days

Q410

Days

Guidance

•

For the second quarter ending April 30, 2011, VeriFone expects net

revenues to be between $280 million and $284 million.  Non-GAAP

net income per share is projected to be in the range of $0.42 to

$0.43.

•

For the full year of fiscal 2011, VeriFone expects net revenues to be

between $1,150 million and $1,160 million.  Non-GAAP net income

per share is projected to be in the range of $1.75 to $1.80 for the

same time period.

12

12

13

13

NFC Enabled Mobile Commerce Gaining Momentum

Fundamental Rules for the Success of Mobile Commerce

1.

The point of sale becomes the hub of systems complexity

2.

Consumers

must

see

“real

value”

from

these

new

ways

to

pay

3.

Retailers will not tolerate special purpose lanes for smart-phone shoppers

4.

Mobile commerce must be ubiquitous to be successful

5.

Plastic cards won’t disappear any time soon 

6.

Security must be ironclad

14

14

15

15

Financial Results for the

Quarter Ended January 31,

2011

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES

RECONCILIATIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)

(UNAUDITED)

	Three Months Ended January 31,
	2011			2010
GAAP Net revenues - System Solutions	$	225,707		$	188,014
Amortization of step-down in deferred revenue on acquisition		—			—
Non-GAAP Net revenues - System Solutions	$	225,707		$	188,014
GAAP Net revenues - Services	$	58,058		$	35,386
Amortization of step-down in deferred revenue on acquisition		175			—
Non-GAAP Net revenues - Services	$	58,233		$	35,386
GAAP Net revenues	$	283,765		$	223,400
Amortization of step-down in deferred revenue on acquisition		175			—
Non-GAAP Net revenues	$	283,940		$	223,400
GAAP Cost of net revenues - System Solutions	$	140,140		$	120,085
Stock-based compensation		(351	)		(340	)
Acquisition related and Restructuring costs		(26	)		(134	)
Amortization of purchased intangible assets		(4,636	)		(4,893	)
Non-GAAP Cost of net revenues - System Solutions	$	135,127		$	114,718
GAAP Cost of net revenues - Services	$	32,134		$	21,409
Stock-based compensation		(47	)		(54	)
Acquisition related and Restructuring costs		5			(95	)
Amortization of purchased intangible assets		(223	)		(209	)
Non-GAAP Cost of net revenues - Services	$	31,869		$	21,051
GAAP Gross profit - System Solutions	$	85,567		$	67,929
Amortization of step-down in deferred revenue on acquisition		—			—
Stock-based compensation		351			340
Acquisition related and Restructuring costs		26			134
Amortization of purchased intangible assets		4,636			4,893
Non-GAAP Gross profit - System Solutions	$	90,580		$	73,296
GAAP System Solutions gross margins		37.9	%		36.1	%
Amortization of step-down in deferred revenue on acquisition as a % of System Solutions net revenues		0.0	%		0.0	%
Stock-based compensation as a % of System Solutions net revenues		0.2	%		0.2	%
Acquisition related and Restructuring costs as a % of System Solutions net revenues		0.0	%		0.1	%
Amortization of purchased intangible assets as a % of System Solutions net revenues		2.1	%		2.6	%
Non-GAAP System Solutions gross margins		40.1	%		39.0	%
GAAP Gross profit - Services	$	25,924		$	13,977
Amortization of step-down in deferred revenue on acquisition		175			—
Stock-based compensation		47			54
Acquisition related and Restructuring costs		(5	)		95
Amortization of purchased intangible assets		223			209
Non-GAAP Gross profit - Services	$	26,364		$	14,335

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES

RECONCILIATIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)

(UNAUDITED)

	Three Months Ended January 31,
	2011			2010
GAAP Services gross margins		44.7	%		39.5	%
Amortization of step-down in deferred revenue on acquisition as a % of Services net revenues		0.3	%		0.0	%
Stock-based compensation as a % of Services net revenues		0.1	%		0.2	%
Acquisition related and Restructuring costs as a % of Services net revenues		0.0	%		0.3	%
Amortization of purchased intangible assets as a % of Services net revenues		0.4	%		0.6	%
Non-GAAP Services gross margins		45.3	%		40.5	%
GAAP Gross profit	$	111,491		$	81,906
Amortization of step-down in deferred revenue on acquisition		175			—
Stock-based compensation		398			394
Acquisition related and Restructuring costs		21			229
Amortization of purchased intangible assets		4,859			5,102
Non-GAAP Gross profit	$	116,944		$	87,631
GAAP Gross margins		39.3	%		36.7	%
Amortization of step-down in deferred revenue on acquisition as a % of net revenues		0.1	%		0.0	%
Stock-based compensation as a % of net revenues		0.1	%		0.2	%
Acquisition related and Restructuring costs as a % of net revenues		0.0	%		0.1	%
Amortization of purchased intangible assets as a % of net revenues		1.7	%		2.3	%
Non-GAAP Gross margins		41.2	%		39.2	%
GAAP Research and development	$	21,642		$	17,100
Stock-based compensation		(876	)		(937	)
Acquisition related and Restructuring costs		(4	)		—
Non-GAAP Research and development	$	20,762		$	16,163
GAAP Sales and marketing	$	28,306		$	20,475
Stock-based compensation		(3,030	)		(1,825	)
Acquisition related and Restructuring costs		(167	)		—
Non-GAAP Sales and marketing	$	25,109		$	18,650
GAAP General and administrative and amortization of purchased intangible assets	$	26,332		$	24,973
Stock-based compensation		(3,138	)		(1,527	)
Other charges - SOX remediation		—			(1,094	)
Acquisition related and Restructuring costs		(2,759	)		(762	)
Amortization of purchased intangible assets		(2,316	)		(4,492	)
Non-GAAP General and administrative	$	18,119		$	17,098

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES

RECONCILIATIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)

(UNAUDITED)

	Three Months Ended January 31,
	2011			2010
GAAP Operating expenses	$	76,280		$	62,548
Stock-based compensation		(7,044	)		(4,289	)
Other charges - SOX remediation		—			(1,094	)
Acquisition related and Restructuring costs		(2,930	)		(762	)
Amortization of purchased intangible assets		(2,316	)		(4,492	)
Non-GAAP Operating expenses	$	63,990		$	51,911
GAAP Operating income	$	35,211		$	19,358
Amortization of step-down in deferred revenue on acquisition		175			—
Stock-based compensation		7,442			4,683
Other charges - SOX remediation		—			1,094
Acquisition related and Restructuring costs		2,951			991
Amortization of purchased intangible assets		7,175			9,594
Non-GAAP Operating income	$	52,954		$	35,720
GAAP Operating margin		12.4	%		8.7	%
Amortization of step-down in deferred revenue on acquisition as a % of net revenues		0.1	%		0.0	%
Stock-based compensation as a % of net revenues		2.6	%		2.1	%
Other charges - SOX remediation as a % of net revenues		0.0	%		0.5	%
Acquisition related and Restructuring costs as a % of net revenues		1.0	%		0.4	%
Amortization of purchased intangible assets as a % of net revenues		2.5	%		4.3	%
Non-GAAP Operating margin		18.6	%		16.0	%
GAAP Interest expense	$	(7,570	)	$	(7,254	)
Acquisition related interest charges		466			414
Non-cash interest expense		3,819			3,571
Non-GAAP Interest expense	$	(3,285	)	$	(3,269	)
GAAP Interest income	$	283		$	296
Non-GAAP Interest income	$	283		$	296
GAAP Other income (expense), net	$	1,651		$	(1,760	)
Other charges - acquisitions related and other		(2,178	)		343
Gain on debt extinguishment		—			(61	)
Non-GAAP Other expense, net	$	(527	)	$	(1,478	)

VERIFONE SYSTEMS, INC. AND SUBSIDIARIES

RECONCILIATIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)

(UNAUDITED)

	Three Months Ended January 31,
	2011			2010
Non-GAAP Income before income taxes	$	49,425		$	31,269
GAAP Provision for (benefit from) income taxes	$	(2,456	)	$	19
Income tax effect of non-GAAP exclusions		12,341			8,736
Non-GAAP Provision for income taxes (1)	$	9,885		$	8,755
Non-GAAP Income tax rate (1)		20	%		28	%
GAAP Net income	$	32,031		$	10,621
Amortization of step-down in deferred revenue on acquisition		175			—
Stock-based compensation		7,442			4,683
Other charges - SOX remediation, acquisitions related and other		(1,712	)		1,851
Acquisition related and Restructuring costs		2,951			991
Amortization of purchased intangible assets		7,175			9,594
Non-cash interest expense		3,819			3,571
Gain on debt extinguishment		—			(61	)
Income tax effect of non-GAAP exclusions		(12,341	)		(8,736	)
Total Non-GAAP Net income	$	39,540		$	22,514
Non-GAAP Net income per share:
Basic	$	0.45		$	0.27
Diluted	$	0.43		$	0.26
Weighted average shares used in computing Non-GAAP net income per share:
Basic		87,090			84,690
Diluted		91,321			86,610
GAAP Net income as a % of net revenues		11.3	%		4.8	%
Amortization of step-down in deferred revenue on acquisition as a % of net revenues		0.1	%		0.0	%
Stock-based compensation as a % of net revenues		2.6	%		2.1	%
Other charges - SOX remediation, acquisitions related and other as a % of net revenues		-0.6	%		0.8	%
Acquisition related and Restructuring costs as a % of net revenues		1.0	%		0.4	%
Amortization of purchased intangible assets as a % of net revenues		2.5	%		4.3	%
Non-cash interest expense as a % of net revenues		1.3	%		1.6	%
Gain on debt extinguishment as a % of net revenues		0.0	%		0.0	%
Income tax effect of non-GAAP exclusions as a % of net revenues		-4.3	%		-3.9	%
Total Non-GAAP Net income as a % of non-GAAP net revenues		13.9	%		10.1	%

(1) The Non-GAAP tax rate used in our Non-GAAP reconciliation was changed beginning the fiscal third quarter 2010 from 28% to 20%.