VeriFone Reports Third Quarter Fiscal 2006 Results; Record Third Quarter Revenues of $148 Million; EBITDA Margins, as Adjusted, Increased to 22.6% for the Quarter; Third Quarter GAAP Net Income Increased 156%

Business Wire, August 31, 2006

SAN JOSE, Calif. -- VeriFone Holdings, Inc. (NYSE: PAY), a leading global provider of technology that enables electronic payment transactions, today announced financial results for the three months ended July 31, 2006. E[acute accent]Net revenues for the three months ended July 31, 2006, were $147.6 million, an increase of 17% over net revenues of $125.7 million for the comparable period of fiscal 2005. The increase was driven by a 19% increase in net revenues from VeriFone's North America business and a 16% increase in net revenues in VeriFone's International business. E[acute accent]Gross margins, under generally accepted accounting principles (GAAP), for the three months ended July 31, 2006, were 45.0%, compared to 40.7% for the three months ended July 31, 2005. Gross margins, excluding non-cash amortization of purchased intangibles and stock-based compensation expense, expanded for the seventh consecutive quarter and reached 45.9% compared to 42.0% for the three months ended July 31, 2005. E[acute accent]Net income for the three months ended July 31, 2006, was $16.8 million, or $0.24 per diluted share, compared to $6.5 million, or $0.10 per diluted share, for the comparable period of fiscal 2005. Net income, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, for the three months ended July 31, 2006, was $19.7 million, or $0.28 per diluted share, compared to $13.1 million, or $0.20 per diluted share, for the comparable period of fiscal 2005. E[acute accent]EBITDA, as adjusted, which excludes non-cash amortization of purchased intangibles and debt issuance costs, as well as non-cash stock-based compensation expense, expanded for the eighth consecutive quarter and reached a record level of $33.4 million, a 49% increase over the $22.4 million recorded in the three months ended July 31, 2005. As a percent of net revenues, EBITDA, as adjusted, for the three months ended July 31, 2006, reached 22.6%, substantially higher than the 17.8% recorded in the three months ended July 31, 2005. E[acute accent]"We are once again extremely pleased with the consistency of our quarterly results, demonstrated by our tenth consecutive quarter with double digit revenue growth and our eighth consecutive quarter of expanded EBITDA as adjusted margins, which reached a record level of 22.6% in the quarter," said Douglas G. Bergeron, Chairman and Chief Executive Officer. "We are expecting to close the acquisition of Lipman Electronic Engineering Ltd. by November 1, 2006, and remain confident that we will receive clearance by the United States Department of Justice very shortly. We remain on track to deliver another year of outstanding results and we remain confident in our long-term model, which calls for annual revenue growth of 10 to 15% and annual adjusted net income per share growth of 20% or more." E[acute accent]"Based on our confidence with our near term and long term outlook, we are raising our FY06 year end guidance to $1.07 to $1.08 of adjusted net income per share. We are also raising our FY07 guidance to $1.40 to $1.42 of adjusted net income per share, assuming a November 1, 2006, completion of the Lipman acquisition," continued Bergeron.

E[acute accent]Third Quarter Highlights

E[acute accent]--VeriFone's MX870 system is establishing itself as the clear leader among full size color touch screen multimedia payment systems. In addition to its compelling features and functionality, another key differentiating factor is that it remains the only PCI compliant touch screen device on the market. The head start that the MX870 enjoys over competitive solutions has enabled the MX870 to win the vast majority of the large national multi-lane retail deals decided since mid-2005, and all of the new large multi-media terminal decisions made by retailers in 2006. The EMV compliant version of the MX870 is under development for planned release during the fourth quarter.

E[acute accent]--VeriFone and MICROS Systems Inc.,(NASDAQ: MCRS) have continued to work together to integrate VeriFone's pay-at-the-table solution with next generation MICROS enterprise software. This initiative has created a significant opportunity for the MICROS direct sales channel and over eighty MICROS distributors to take this solution to market in September. VeriFone is also working on agreements with several other hospitality system vendors, continuing to build momentum in creating technology partnerships and expanding its distribution channel in this market.

E[acute accent]--On August 14, 2006, VeriFone announced its acquisition of Trintech's payment systems business. Their unattended and outdoor payment systems will enhance VeriFone's solutions in the growing markets for self-service payment, vending and pay-at-the-pump applications and will extend VeriFone's existing offerings for merchants and financial institutions. This acquisition is expected to close September 1, 2006.