VeriFone Systems Inc (PAY.N) posted better-than-expected quarterly results and raised its full-year outlook as it ropes in more customers for mobile payment technologies.
The credit card swipe machine maker is betting on strong demand for near field communication (NFC) technology that allows people to pay for their purchases by waving an NFC-enabled mobile phone.
VeriFone, whose customers are primarily financial institutions, payment processors, petroleum companies and retailers, is seeing growing demand for these mobile payment technologies in the United Kingdom ahead of the 2012 Olympics.
In London we have now signed nearly 6000 taxis to five-year processing agreements. UK retailers continue to embrace contactless systems, Chief Executive Douglas Bergeron said on a conference call with analysts.
The company continues to work with Google Inc (GOOG.O) to roll out the Google Wallet mobile payment service, which uses wireless NFC technology on mobile handsets.
The next big phase of the Google rollout is currently planned for the end of the month where we go from hundreds of locations to tens of thousands of locations, CEO Bergeron said on the call.
Verifone is also working with ISIS -- a NFC-based mobile payment joint venture between AT&T (T.N), T-Mobile and Verizon Wireless (VZ.N) -- and PayPal Inc bring mobile payments to point-of-sale terminals in 2012.
It has also won a $6.9 million contract with the Metropolitan Transportation Authority of New York City to deploy 1000 of its TransitPAY systems on buses which allow NFC-enabled smartphone-based payments.
If initial rollouts lead to widescale deployment across the industry, the company's revenue would grow by $100-$150 million in the U.S. and internationally.
The company expects fourth-quarter adjusted earnings of 49-50 cents per share on sales of $395-$400 million. Analysts were expecting a fourth-quarter profit of 49 cents, on revenue of $395.9 million, according to Thomson Reuters I/B/E/S.
However, growth in North America will remain flat in the fourth quarter. Growth in the market will pick up next year, VeriFone said. It expects higher growth from Europe - especially from UK, France and Germany - and from emerging markets.
Verifone raised its full-year adjusted profit outlook to $1.88-$1.89 a share on sales of $1.289-$1.29 billion, from its prior forecast of an adjusted profit of $1.80-$1.83 a share on sales of $1.17-$1.18 billion.
For the full year, analysts were expecting a profit of $1.84 a share on sales of $1.27 billion.
The company, which completed its acquisition of smaller rival Hypercom in August, expects the Hypercom to contribute revenue of about $350 million and adjusted profit of 20-25 cents in 2012.
Third-quarter net income rose to $26.3 million, or 28 cents a share, from $18.5 million, or 21 cents a share, last year.
Excluding one-offs, the company earned 49 cents a share.
The company's sales rose by a fifth to $317 million.
Analysts, on average, had expected earnings of 46 cents a share, excluding items, on revenue of $299.4 million.
Shares of the San Jose, California-based company were up about 3 percent in extended trade, after closing at $35.07 on Tuesday on the New York Stock Exchange.