Electronic payment solutions company Verifone on Tuesday reported disappointing earnings for the second quarter of fiscal 2016. The company announced it will be cutting its headcount by 5 percent and making other changes to adjust to an increasingly competitive payments market.
The company reported non-GAAP net income per share of 47 cents on net revenues of $532 million, which was below market expectations of 52 cents a share. The company has an operating cash flow of $51 million.
"Q2 was a mixed quarter for Verifone as we grew our business, but experienced several difficult market dynamics," Verifone CEO Paul Galant said in a statement.
Consequently, the company is adjusting its fiscal year 2016 outlook to $2.1B of revenue and $1.85 of earnings per share.
"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," Galant said.
The point-of-sale hardware/software firm is competing against companies like Square, which has reported mixed earnings results since going public last November but nevertheless claimed momentum from its new readers and unique business partnerships.
In its 10-K report filed with the Securities and Exchange Commission, Verifone noted the breadth of its competition in the market for point-of-sale (POS) terminals and services. It pointed to other electronic payment terminal makers like Equinox Payments and Pax Technology, as well as tech giants like companies from IBM and Oracle, while acknowledging "vigorous competition from smaller companies that have been able to develop strong local or regional customer bases."
In addition to the intense competition, Verifone executives on Tuesday noted two other challenges the company faces: First, there was a slowdown in some emerging markets. Particularly in Latin America and Asia, Verifone saw more "competitive price pressure" than expected.
Second, Verifone executives noted that delays in EMV certifications -- the standard for chip card authentication -- forced the company to shift its North America product mix.
In addition to layoffs, Verifone said it's responding to the challenging market by restructuring its businesses and products that are less core to its strategy. It's also holding R&D spending steady at 10 percent of revenue to work on next-generation products and services and transform the company from a box shipper to a services provider.