Verifone dives into open development and gas pump media
A new joint venture with Gas Station TV will help Verifone Systems Inc. expand its services in the coming year, providing more exposure for the terminal manufacturer's merchant clients and a stronger media service for its petroleum clients.
In addition, Verifone will expand its role as a software provider by establishing a third-party developer portal in the U.S. to increase exposure to the company's commerce and omni-channel services, Verifone CEO Paul Galant said March 8 during a 2017 first quarter earnings call.
GSTV executives have estimated that its network has 70 million viewers per month, a captive audience that watches messages on TV screens while pumping gas.
"The petroleum business is a critically important business for us in North America," Galant said. "We got into the petro and taxi media business mostly through past acquisitions, as those areas were not core to Verifone. To be successful, you have to be night-and-day focused on it."
To that end, Verifone executives determined that in order to help the company's commerce services teams, they had to develop partnerships with other providers.
"We got to know the GSTV people very well," Galant said. "This was very much a decision about getting velocity back into this business."
Verifone will have to educate its clients about the benefits of having messages displayed at a gas pump, Galant added. "You can demonstrate that the four-and-a-half minutes that a person is pumping gas in a car can be very, very valuable."
The agreement with GSTV will give Verifone immediate scale, with more than 100,000 screens at stations throughout North America, Galant said. "We will get some revenue and cost synergies out of this combination," he added. "And it gives us a much better product."
With the third-party developer portal, Galant said that Verifone can now say "we are no longer in the terminal sales business, but we are now a solutions provider."
The company is not expecting the developer portal to be a revenue center immediately. "It may take several years for it to become something exciting [for revenue] but this is about the creation of a platform," Galant said.
Two business models come into play when creating payments and other apps on the Verifone network, Galant said. Verifone could create an application and make 100% of the revenue off that app, or a third party could use the Verifone APIs to create a vertical app and get 70% of the revenue, with Verifone getting 30% as the platform provider, he added.
These types of developments will help Verifone continue to move forward with its plans to stabilize earnings and costs in the coming years, Galant said.
Verifone reported a profit for the first quarter, but a decline from the previous year at $23.2 million compared to $53.7 million last year.
Revenue for the quarter fell 11.1% to $456.7 million, down from last year's $513.6 million.
Revenue in North America fell 28% at $169 million, while revenue in Asia rose 19% at $63 million. The company expects to see gradual growth in Europe and Africa as well.
Verifone expects its terminal sales and upgrades to grow as the EMV chip migration continues in the U.S.
"At the end of the first quarter, we estimate that there remain approximately five million devices that need EMV upgrades," Galant said. "These include existing as well as greenfield terminals, and we believe this will occur over a more normalized pace over the next few years."
Verifone continues to look at the hospitality and quick-service restaurant sectors as vital to future terminal and technology sales. The company's line of new mobile devices are designed to serve those markets.