Friday, June 17, 2011
VeriFone Chief Executive Officer and Executive Director Douglas Bergeron discussed his company's growth and expansion plans in a conference call about second quarter 2011 earnings results. He emphasized new business initiatives are driving a 40 percent increase in revenues over the second quarter last year. He added VeriFone had double-digit growth in each of its regions over last year.
"Our business remains extremely well-positioned to grow and expand," Bergeron said. "Internationally, we are mobilized in some of the world's fastest-growing economies. In the U.S. and Europe, we continue to benefit from security and EMV upgrade cycles and a renewed sense of urgency around protecting against data breaches through encryption."
At the top of VeriFone's list of expanding interests is its pending purchase of Hypercom Corp. "We have dissolved our agreement to sell Hypercom's U.S. Business to Ingenico, and we are now in serious and parallel negotiations with several alternative buyers," Bergeron told the phone conference audience. "We continue to anticipate that the transaction will close in the second half of 2011." Because of the interest of the U.S. Justice Department in the proposed deal, Bergeron limited his remarks on the pending Hypercom purchase.
Bergeron said VeriFone has its eye on ISOs, acquirers and resellers with its release of Paymedia solutions. "As a turnkey solution, Paymedia represents an expansive portfolio of systems, infrastructure and services with which ISOs, acquirers and resellers can equip merchants for a true, intelligent checkout capability that integrates traditional payment with discounts, rewards and coupons," he said. "This solution will enable our reseller partners to provide complete integrated solutions that drive consumers into merchant stores by enticing them with rapidly evolving value-added services. A monthly subscription-based pricing model eliminates upfront hardware costs and ensures compatibility with new capability and services as they become available."
Bergeron is excited about the potential of the company's PAYware Mobile. "In June, First Data completes class A certification of PAYware Mobile and will begin marketing the solution as their exclusive smart phone payment solution," he said. PAYware Mobile transactions now exceed 8 million swipes a month, he noted.
High on the list of important growth expansion initiatives is VeriFone's partnership in the Google Wallet startup. Google Wallet is using VeriFone's near field communication (NFC) enabled terminals in trials with leading U.S. retailers. If the trial leads to wider NFC use among U.S. retailers, VeriFone forecasts revenue increases of $100 million to $150 million a year.
The petroleum business is the next big U.S. market for VeriFone, Bergeron said. "We saw strong demand in our petroleum business as sites continue to upgrade for PCI-compliance, loyalty software and our Topaz user interface," he explained.
Data theft at the pump leads to more profit for VeriFone, too. "Sales of our Secure PumpPAY solution continued well in Q2," Bergeron told his audience of analysts. "Recall that there are over 700,000 gas pumps currently in need of an upgrade, as these pumps remain one of the favorite targets for criminals to install illicit skimming devices."
Bergeron announced VeriFone is introducing a managed service program to allow Secure PumpPAY upgrades for a small monthly service fee. VeriFone also is distributing Secure PumpPAY media that allows video advertising content at the pump. The ads are sold by VeriFone's sales force. Secure PumpPAY media is in trials now and will be released to the mainstream market by the end of the year.
VeriFone also recently acquired the South African payment processor Destiny Electronic Commerce. VeriFone finds Destiny Electronic Commerce appealing because it has a highly developed infrastructure and there is real growth opportunity in the emerging South African economy. VeriFone expects this deal will close over the summer.
"South Africa is a very attractive market for VeriFone as the country has a highly developed infrastructure, but also has the growth potential of an emerging economy. This acquisition will provide a base on which to expand VeriFone's Africa business into the company's next $100 million market."
VeriFone and Micros Systems Inc. are working together on a system to integrate smart phones with restaurant management systems. This system will allow NFC restaurant payments and deliver coupons and promotions to customers. The system also interfaces with Micros table management and order management systems.
Bergeron concluded, "We have become the critical enablers of payment security, payment-enabled media, and smart phone-based payment at the point of sale, and together with our industry partners we are reshaping the future of payments."
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