VeriFone Systems, Inc. (PAY) recently signed a comprehensive licensing, marketing and implementation agreement with PayPal.
The agreement is expected to accelerate retailer adoption of PayPal services while reducing bottlenecks in way of such adoption. PayPal is relying on VeriFone to deliver integration services and software licenses to the 10 to 12 tier 1 merchants, who have been strategically selected by PayPal.
Based in San Jose, California, VeriFone designs, markets and services a transaction automation system that facilitates electronic payments between consumers, merchants and financial institutions.
Currently, VeriFone’s customer base includes 80% of the top 2000 largest retailers in the U.S. Hence, the agreement should provide PayPal with unparallel access to over one million high volume points of sale.
In the long term, VeriFone continues to work with PayPal on the continued evolution of payments. The aim of the pact is to validate that multiple commerce technologies can coexist at retailers and unify the customer experience by allowing multiple wallets to coexist, regardless of the technology being used.
Consequently, VeriFone and PayPal will offer retailers the opportunity to converge e-commerce and retail payments into a new shopping experience for consumers.
Further, VeriFone aims to offer retailers a managed service, which can easily accept all existing payment types including the evolving alternative and mobile payment methods being offered by Google, PayPal, Groupon, Isis, Visa, MasterCard and American Express.
Meanwhile, the company reported second-quarter results last week, which were better than our expectations.
The company posted a net income of $14.5 million in the second quarter of fiscal 2012 or $0.13 per diluted share compared with a net loss of $3.1 million or ($0.03) per share in the previous quarter and a net income of $25.2 million or $0.27 per share in the year-ago quarter. Excluding one-time charges but including stock-based compensation expense, net income came in at $0.54 per share, beating the Zacks Consensus Estimate by a penny.
VeriFone reported revenues of $472 million in the second quarter of fiscal 2012, up 61.4% year over year and 12.5% sequentially.
We continue to maintain a Neutral recommendation on VeriFone. Our recommendation is supported by Zacks #3 Rank, which translates into a short-term rating of Hold.
VERIFONE HLDGS (PAY): Free Stock Analysis Report
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