On Wednesday, VeriFone Systems Inc. (NYSE: PAY) slumped 29.15% to $20 after the company announced the second quarter financial results yesterday. VeriFone cut its annual guidance after posting weaker-than-expected results for its latest quarter and stated a strategic review that will likely lead to job cuts.
“We are aggressively executing mitigating actions including a headcount restructuring and a review of underperforming businesses. At the same time, we remain committed to executing our strategy in a disciplined manner, and continue to make progress in bringing our next generation devices to market and launching our services platform.”
According to the earnings announcement, revenues increased 7.3% to $526 million. Excluding certain items, revenue rose 8.5%. Gross margin as a percentage of net revenue was 40% compared with 41.6% on the same quarter last year. Net income per diluted share decreased 80% to $0.03 from $0.15 last year.
VeriFone is outlook for next quarter that revenue of $515M and earnings per share of $0.40, well below a consensus of $552.1M and $0.59. In addition, the point-of-sale hardware and software firm now expects fiscal year 2016 revenue of $2.1B and earnings per share of $1.85, below a consensus of $2.16B and $2.23.
VeriFone facing increasing competition in the payments business which is in the midst of an effort to transform itself to a payment- and commerce-services company from a vendor of payment terminals.
The payments-technology company didn’t give a time frame for its review or an estimate for possible head count reductions. But VeriFone did announce that it hopes to achieve about $30 million in savings in 2017.