Verifone Systems (PAY 20.30, -0.05) is on track to begin lower by 0.3% after reporting a slim first quarter beat and issuing cautious guidance for the second quarter.
The company, which provides payment terminals to retailers and service providers, reported above-consensus earnings of $0.21 per share on revenue of $457 million, which declined 11.1% year-over-year, but was a bit ahead of market expectations.
Verifone was pleased with results that underscored the continuing adoption of the company's latest generation of payment processing technology. The shift to newer devices resulted in a 390-basis point year-over-year decline in the company's gross margin, which shrank to 38.9%.
Systems revenue declined 21.4% year-over-year to $265.40 million while Services revenue grew 8.6% to $191.20 million.
Looking at the geographical breakdown, the company saw the strongest revenue growth in the Asia-Pacific region, which saw a 19.4% year-over-year increase in revenue to $62.90 million. Latin America revenue also grew, increasing 4.0% to $57.00 million while the remaining two regions recorded declines. Europe, Middle East, and Africa revenue fell 1.3% year-over-year to $168.10 million while North America revenue fell 28.5% year-over-year to $168.60 million.
Verifone has a cautious outlook for the second quarter, but expects a pick-up during the second half of the fiscal year. The company expects to generate second quarter earnings of $0.29 per share, which is shy of current market expectations. Revenue is expected between $470 million and $474 million, which is on the high end of expectations. For the full year, the company expects earnings between $1.35 and $1.39 per share on revenue between $1.895 billion and $1.910 billion. The company's guidance range for the full year is close to analysts' expectations.