VeriFone (PAY 18.14, -0.33) has given up 1.8% as disappointing guidance overshadows better than expected results. With today's decline, the stock is now back to little changed for the year.
The payment processor reported above-consensus fourth quarter earnings of $0.44 per share on a 2.6% year-over-year increase in revenue to $476.50 million, which was also ahead of estimates.
Systems revenue increased 1.6% year-over-year to $268.40 million while Services revenue grew 4.1% to $208.10 million. Gross margin improved to 41.4% from 39.5%.
Looking at the company's geographical sales breakdown, revenue in North America declined 9.6% year-over-year to $154.10 million while Asia-Pacific revenue fell 3.8% year-over-year to $46.20 million. The company's Latin America unit enjoyed 17.4% year-over-year revenue growth to $80.20 million while revenue from Europe, Middle East, and Africa increased 8.4% to $196.00 million.
VeriFone sold its Taxi business on December 11, 2017 for $30 million in cash. The proceeds will be used for share buybacks. The company's Board of Directors raised the buyback authorization by $100 million, meaning VeriFone can conduct buybacks of up to $150 million under its current authorization.
Going forward, the company expects to report first quarter earnings of $0.22 on revenue between $418 million and $420 million. The company's guidance range is well below market expectations. For the full-year, earnings are expected between $1.47 per share and $1.50 per share on revenue between $1.775 billion and $1.180 billion. This is also shy of market expectations.
Despite below-consensus guidance, Verifone expects that results for fiscal year 2018 will show a return to growth in the company's core North American segment. Gross margin expansion is expected due to a greater mix of next generation products.