SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Hypercom Corporation (NYSE: HYC), the high security electronic payment and digital transactions solutions provider, today announced financial results for the first quarter ended March 31, 2010.

Net revenue for the three months ended March 31, 2010 was $98.8 million, up 19.3% compared to $82.8 million in the first quarter of 2009, primarily due to strong European and Asia-Pacific growth. The Americas region was down compared to the prior year period due to the mid-2009 decision to exit a low margin services contract in Brazil. First quarter 2010 net revenue declined sequentially 15.9% compared to net revenue of $117.4 million in the fourth quarter of 2009. This decrease was due to normal sales seasonality.

“We are pleased with the first quarter results both from a top-line and profitability perspective. We are making solid overall progress in expanding our business with existing customers, winning significant new business with our market-leading security products, software and services, and we are moving forward with confidence,” said Philippe Tartavull, Chief Executive Officer and President.

Gross profit for the three months ended March 31, 2010 increased to $34.7 million or 35.2% of net revenue from $24.2 million or 29.3% of net revenue in the first quarter of 2009. Gross margin for the three months ended March 31, 2010 included 37.0% product gross margin and 32.4% service gross margin, compared to 32.8% and 23.9% in the first quarter of 2009 and 34.1% and 24.7% in the fourth quarter of 2009. Gross profit and gross margin increased compared to the prior year primarily due to significantly higher sales volume that reflected improved economic conditions, favorable product and geographic mix, and continued contract manufacturing cost improvements. Year-over-year first quarter gross profit and gross margin also increased due to a higher service margin that resulted from efficiency improvements and favorable mix. First quarter 2010 gross profit sequentially declined $2.1 million from $36.8 million in the fourth quarter of 2009. The decrease relates to lower revenue volume due to sales seasonality. Despite the sequential decrease in gross profit, gross margin sequentially increased from 31.3% to 35.2% as a result of a favorable product and geographic mix, contract manufacturing cost improvements and service cost improvements.

Non-GAAP gross profit for the three months ended March 31, 2010 was $35.7 million or 36.1% of net revenue, compared to $25.0 million or 30.2% of net revenue in the first quarter of 2009, and $38.1 million or 32.4% of net revenue in the fourth quarter of 2009. The non-GAAP gross profit excludes restructuring costs, amortization of purchased intangibles and stock-based compensation. Non-GAAP gross profit for the three months ended March 31, 2010 included 37.2% product gross margin and 32.9% service gross, versus 33.0% and 23.9% in the prior year period, and 34.1% and 26.6% in the fourth quarter of 2009.

Operating expenses for the three months ended March 31, 2010 were $31.3 million or 31.7% of net revenue, compared to $30.6 million or 37.0% of net revenue in first quarter of 2009 and $33.8 million or 28.8% of net revenue in the fourth quarter of 2009. The year-over-year increase in operating expense was primarily related to higher R&D and general and administrative expenses, offset by lower selling expense and a $0.7 million gain on a sale of assets to Phoenix Managed Networks LLC. The sequential quarter decrease in operating expenses is related to decreases in R&D, selling, and general and administrative expenses and a $0.7 million gain on a sale of assets in the first quarter of 2010.

Non-GAAP operating expenses for the three months ended March 31, 2010 were $30.0 million or 30.4% of net revenue, compared to $28.4 million or 34.3% for the same period in 2009 and $31.7 million or 27.0% of net revenue in the fourth quarter of 2009.

Operating income for the three months ended March 31, 2010 was $3.4 million, compared to an operating loss of $6.4 million in first quarter 2009 and operating income of $2.9 million in the fourth quarter of 2009. Adjusted EBITDA for the three months ended March 31, 2010 was $8.3 million, versus Adjusted EBITDA of $(0.9) million in the same quarter of 2009 and $9.2 million in the fourth quarter of 2009.

Net income for the three months ended March 31, 2010 was $0.4 million or $0.01 per diluted share, versus a net loss of $9.9 million or $(0.19) per diluted share in the first quarter of 2009 and net income of $0.6 million or $0.01 per diluted share in the fourth quarter of 2009. Non-GAAP income before discontinued operations for the three months ended March 31, 2010 was $3.4 million or $0.06 per diluted share, compared to a loss of $6.2 million or $(0.12) per diluted share for the same period in 2009 and income of $6.0 million or $0.11 per diluted share in the fourth quarter of 2009.

Cash decreased $8.3 million from $55.0 million at December 31, 2009 to $46.7 million at the end of March 31, 2010. The cash decrease is primarily related to an increase of inventory in Brazil in anticipation of forecasted future sales. Subsequent to March 31, 2010, the Company repaid $3.0 million of outstanding long-term debt.

Hypercom Corporation (NYSE: HYC) has scheduled its conference call to discuss first quarter 2010 results for Wednesday, May 5 at 4:30pm ET. The call will be simultaneously webcast.

The dial in number is 800.299.6183 for North American callers and 617.801.9713 for international callers. For access to the call, participants will be required to identify the participant passcode: 56451552.

To access the audio webcast, please go to Hypercom’s website, http://ir.hypercom.com, at least two minutes prior to the call to register.

A replay of the conference call can be accessed approximately one hour after the conclusion of the live call and will be available until June 6, 2010. The replay number for North America is 888.286.8010. The number for international callers is 617.801.6888. The passcode is 62823854. A replay of the call can also be accessed in the “audio archive” section of http://ir.hypercom.com, where it will remain until the next results release.