2017 Annual Report

2018 Notice & Proxy Statement

February 8, 2018

Dear Fellow Stockholder: You are cordially invited to attend the 2018 Annual Meeting of Stockholders of VeriFone Systems, Inc. (“Verifone”). We will hold the meeting on Thursday, March 22, 2018 at 8:30 a.m., local time, at Verifone’s principal offices located at 88 W. Plumeria Drive, San Jose, CA 95134. We hope that you will be able to attend.

Details of the business to be conducted at the Annual Meeting are provided in the attached Notice of 2018 Annual Meeting of Stockholders (the “Notice of Annual Meeting”) and Proxy Statement. As a stockholder, you will be asked to vote on a number of important matters. We encourage you to vote on all matters listed in the enclosed Notice of Annual Meeting. The Board of Directors recommends a vote FOR the proposals listed as proposals 1, 2 and 3 in the Notice of Annual Meeting.

Board Oversight. As a Board of Directors, we are actively engaged in the oversight of Verifone. As directors, each of us makes a commitment to the extensive time and rigor required to serve on the Board. During 2017, the Board’s discussions focused in particular on the Company’s objectives of scaling its next-generation devices and in linking the Company’s device footprint to the Company’s cloud infrastructure. We also continued to focus on the Company’s strategy to return to growth. We believe that the Company has made significant progress on its transformation and look forward to the Company continuing to implement its growth strategy.

Engaging with Stockholders. We continued our focus on stockholder engagement in 2017. We engaged with stockholders representing over 50% of our outstanding shares of common stock to address executive compensation issues. Over the past several years, we have instituted a number of meaningful changes to our executive compensation program in response to stockholder feedback in order to align our short-term and long-term incentive compensation plans with the views of our stockholders. We also continue to engage with our stockholders on corporate governance matters and adopted a “proxy access” amendment to our bylaws in December 2016. We are also pleased that over 92% of the votes cast on our stockholder advisory proposal on our executive compensation program voted in favor of the compensation of our named executive officers at our 2017 annual meeting of stockholders.

Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the meeting. In addition to voting in person, stockholders of record may vote via a toll-free telephone number or over the Internet. Stockholders who received a paper copy of the Proxy Statement and Annual Report by mail may also vote by completing, signing and mailing the enclosed proxy card promptly in the return envelope provided.

On behalf of our Board of Directors, thank you for your continued support of Verifone.

Sincerely,

Alex W. (Pete) Hart Chair of the Board of Directors

YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY SUBMIT YOUR PROXY BY INTERNET, PHONE OR MAIL. [THIS PAGE INTENTIONALLY LEFT BLANK] NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS Notice is hereby given that the 2018 Annual Meeting of Stockholders of VeriFone Systems, Inc. (“Verifone”) will be held on Thursday, March 22, 2018 at 8:30 a.m., local time, at Verifone’s principal offices located at 88 W. Plumeria Drive, San Jose, CA 95134, to conduct the following items of business: 1. Election of ten directors to our Board of Directors for one-year terms; 2. An advisory vote to approve the compensation of our named executive officers; 3. Ratification of the selection of Ernst & Young LLP as Verifone’s independent registered public accounting firm for our fiscal year ending October 31, 2018; and 4. Such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof. The foregoing business items are described more fully in the Proxy Statement accompanying this Notice of Annual Meeting. All holders of record of our common stock as of 5:00 p.m. Eastern Standard Time on January 26, 2018, the record date, are entitled to notice of and to vote at this meeting and any adjournments or postponement thereof. A list of stockholders entitled to vote at the Annual Meeting will be available for inspection during the ten days prior to the Annual Meeting, during ordinary business hours, at Verifone’s principal offices located at 88 W. Plumeria Drive, San Jose, CA 95134, as well as at the Annual Meeting. All stockholders are cordially invited to attend the Annual Meeting in person. To enter the meeting, you will need to provide proof of ownership of Verifone stock as of 5:00 p.m. Eastern Standard Time on January 26, 2018, as well as an acceptable form of personal photo identification. If you hold your shares in your own name, your proof of ownership is your proxy card. If you hold your shares through a broker, trustee or nominee, you must bring either a copy of the voting instruction card provided by your broker or nominee or a recent brokerage statement confirming your ownership as of 5:00 p.m. Eastern Standard Time on January 26, 2018. Any stockholder attending the Annual Meeting may vote in person even if he or she has returned a proxy card. Whether or not you plan to attend the Annual Meeting, please cast your vote as instructed under “Voting Procedures” in the Proxy Statement as promptly as possible. You may vote over the Internet or by telephone as instructed on the Notice of Internet Availability of Proxy Materials or by mailing in your paper proxy card if you received one. If you did not receive a paper proxy card, you may request a paper proxy card to submit your vote by mail, if you prefer. By Order of the Board of Directors,

Paul Galant Vik Varma Chief Executive Officer Corporate Secretary February 8, 2018 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 22, 2018: This Notice of Annual Meeting, the Proxy Statement and the Annual Report are available on the Internet at www.proxyvote.com. The Securities and Exchange Commission (“SEC”) has adopted a “Notice and Access” rule that allows companies to deliver a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to stockholders in lieu of a paper copy of the proxy statement, related materials and Verifone’s annual report to stockholders. The Notice of Internet Availability provides instructions as to how stockholders can access the proxy materials online, contains a listing of matters to be considered at the meeting, and sets forth instructions as to how shares can be voted. Shares must be voted either by telephone, online, or by completing and returning a proxy card. Shares cannot be voted by marking, writing on and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the proxy materials are set forth on the Notice of Internet Availability. [THIS PAGE INTENTIONALLY LEFT BLANK] Table of Contents

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PROCEDURAL INFORMATION ...... 1 DIRECTOR INDEPENDENCE AND CORPORATE GOVERNANCE ...... 5 OUR BOARD OF DIRECTORS ...... 11 EXECUTIVE COMPENSATION ...... 19 REPORT OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE ...... 54 REPORT OF THE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE ...... 55 REPORT OF THE AUDIT COMMITTEE ...... 56 EQUITY COMPENSATION PLAN INFORMATION ...... 57 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ...... 58 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...... 60 MATTERS SUBMITTED FOR VOTE ...... 61 PROPOSAL 1: ELECTION OF DIRECTORS ...... 61 PROPOSAL 2: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS .... 63 PROPOSAL 3: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...... 65 OTHER MATTERS ...... 67 APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES TO GAAP FINANCIAL PERFORMANCE MEASURES ...... A-1

2018 Proxy Statement i [THIS PAGE INTENTIONALLY LEFT BLANK] VERIFONE SYSTEMS, INC. 88 W. PLUMERIA DRIVE SAN JOSE, CA 95134

PROXY STATEMENT FOR 2018 ANNUAL MEETING OF STOCKHOLDERS

PROCEDURAL INFORMATION

General Verifone Systems, Inc. (“Verifone,” the “Company,” “we” or “our”) is furnishing this Proxy Statement to the holders of its common stock, par value $0.01 per share, in connection with the solicitation by its Board of Directors of proxies to be voted at its 2018 Annual Meeting of Stockholders on Thursday, March 22, 2018 at 8:30 a.m., local time, and at any adjournments or postponements thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at Verifone’s principal offices located at 88 W. Plumeria Drive, San Jose, CA 95134.

The Notice of Annual Meeting, Proxy Statement and form of proxy are first being provided to our stockholders on or about February 8, 2018.

All stockholders are cordially invited to attend the Annual Meeting in person. To attend the Annual Meeting, you will need to provide proof of ownership of Verifone stock as of 5:00 p.m. Eastern Standard Time on January 26, 2018, as well as an acceptable form of personal photo identification. If you hold your shares in your own name, your proof of ownership is your proxy card. If you hold your shares through a broker, trustee or nominee, you must bring either a copy of the voting instruction card provided by your broker or nominee or a recent brokerage statement confirming your ownership as of 5:00 p.m. Eastern Standard Time on January 26, 2018.

Notice Regarding the Availability of Proxy Materials We have adopted the “notice and access” rule of the U.S. Securities and Exchange Commission (the “SEC”). As a result, we furnish proxy materials primarily via the Internet instead of mailing a printed copy of the proxy materials. Stockholders will receive a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) by mail which provides the website and other information on how to access and review the Proxy Statement and proxy materials over the Internet. The Notice of Internet Availability will be mailed on or about February 8, 2018.

As of the date of the mailing of the Notice of Internet Availability, stockholders will be able to access all of the proxy materials over the Internet as instructed in the Notice of Internet Availability. The proxy materials will be available free of charge. The Notice of Internet Availability will provide instructions on how to vote over the Internet or by phone.

If you received a Notice of Internet Availability and would like to receive a printed copy of our proxy materials, free of charge, you should follow the instructions for requesting such materials included in the Notice of Internet Availability.

Record Date; Voting Rights Only stockholders of record as of 5:00 p.m. Eastern Standard Time on January 26, 2018 will be entitled to vote at the Annual Meeting. As of that date, there were 110,351,526 shares of our common stock outstanding, each of which is entitled to one vote for each matter to be voted on at the Annual Meeting, held by 68 stockholders of record. For information regarding security ownership by executive officers and directors and by beneficial owners of more than 5% of Verifone’s common stock, see “Security Ownership of Certain Beneficial Owners and Management.”

2018 Proxy Statement 1 Voting Procedures If you are a stockholder of record as of the record date, you may vote your shares over the Internet or by telephone by following the instructions set forth on the Notice or the proxy card mailed to you, or by mailing in a completed proxy card. Your shares will be voted at the Annual Meeting in the manner you direct. The Internet voting procedures are designed to authenticate each stockholder’s identity and to allow stockholders to vote their shares and confirm that their voting instructions have been properly recorded. If you vote via the Internet, you do not need to return your proxy card. Stockholders voting via the Internet should understand that there may be costs associated with voting in these manners, such as usage charges from Internet service providers that must be borne by the stockholder.

Votes submitted by mail, telephone or via the Internet must be received by 11:59 p.m., Eastern Daylight Time, on March 21, 2018. Submitting your vote by mail, telephone or via the Internet will not affect your right to vote in person should you decide to attend the Annual Meeting.

If your shares are registered in the name of a bank or brokerage firm, you will receive instructions from your bank or brokerage firm that must be followed in order for the record holder to vote the shares per your instructions. Banks and brokerage firms have a process for their beneficial holders to provide instructions via the Internet or over the phone, as well as instructions for requesting a hard copy of the proxy materials and proxy card.

Quorum The holders of a majority of the outstanding shares of common stock as of 5:00 p.m. Eastern Standard Time on January 26, 2018, present in person or represented by proxy and entitled to vote, will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and “broker non-votes” are treated as present for quorum purposes.

Broker Non-Votes Generally, broker non-votes occur when shares held by a broker, bank, or other nominee in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker, bank, or other nominee (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting power to vote those shares with respect to that particular proposal. “Broker non-votes” are treated as present for purposes of determining a quorum but are not counted as withheld votes, votes against the matter in question, or as abstentions, nor are they counted in determining the number of votes present for a particular matter.

Under rules of the New York Stock Exchange (“NYSE”), which apply to us, the election of directors (Proposal 1) and the advisory vote to approve the compensation of our fiscal 2017 named executive officers (our “NEOs”) (Proposal 2) are matters on which a broker may not vote without your instructions. Therefore, if you do not provide instructions to the record holder of your shares with respect to these proposals, your shares will not be voted on these “non-routine” matters. The ratification of the appointment of our independent registered public accounting firm (Proposal 3) is a routine item under NYSE rules. As a result, brokers who do not receive instructions as to how to vote on that matter generally may vote on that matter in their discretion.

If your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate in the stockholder voting on these important matters.

2 2018 Proxy Statement Voting Requirements The number of votes required to approve each of the proposals that are scheduled to be presented at the meeting is as follows:

Proposal Required Vote • Election of directors. • A vote of the majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee) is required for the election of each director. Abstentions will have no effect on the election of directors. • Advisory vote to approve the compensation of our • The affirmative vote of the majority of shares named executive officers. present in person or represented by proxy and entitled to vote on the matter. Abstentions will have the same effect as a vote “Against” the matter. • Ratification of appointment of Ernst & Young LLP • The affirmative vote of the majority of shares as Verifone’s independent registered public present in person or represented by proxy and accounting firm. entitled to vote on the matter. Abstentions will have the same effect as a vote “Against” the matter.

Proxy Solicitation Verifone will pay the costs of soliciting proxies. In addition to the use of mails, proxies may be solicited by personal or telephone conversation, facsimile, electronic communication, posting on Verifone’s website, http://www.verifone.com, and by the directors, officers and employees of Verifone, for which they will not receive additional compensation. Verifone may reimburse brokerage firms and other owners representing beneficial owners of shares for their reasonable expenses in forwarding solicitation materials to such beneficial owners.

Proxies and ballots will be received and tabulated by the inspector of election for the Annual Meeting. The inspector of election will treat shares of common stock represented by a properly signed and returned proxy as present at the meeting for purposes of determining a quorum, whether or not the proxy is marked as casting a vote or abstaining or withholding on any or all matters.

Revocation of Proxies The shares represented by valid proxies received and not revoked will be voted at the Annual Meeting. If you execute and return the enclosed proxy card but do not give instructions, your shares will be voted as follows: “FOR” the election of all of our director nominees (Proposal 1), “FOR” the advisory vote to approve the compensation of our NEOs (Proposal 2), “FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending October 31, 2018 (Proposal 3) and otherwise in accordance with the judgment of the persons voting the proxy on any other matter properly brought before the Annual Meeting and any adjournments or postponements thereof.

A proxy may be revoked at any time before it is voted by (i) delivering a written notice of revocation to our Secretary at c/o VeriFone Systems, Inc., 88 W. Plumeria Drive, San Jose, CA 95134, (ii) subsequently submitting a duly executed proxy bearing a later date than that of the previously submitted proxy (including by submission over the Internet), or (iii) attending the Annual Meeting and voting in person. Attending the Annual Meeting without voting will not revoke your previously submitted proxy.

Stockholder Proposals for the 2019 Annual Meeting Our stockholders may submit proposals that they believe should be voted upon at our 2019 Annual Meeting of Stockholders.

2018 Proxy Statement 3 In the event a stockholder wishes to have a proposal considered for presentation at our 2019 Annual Meeting and included in our proxy statement and form of proxy used in connection with such meeting, the proposal must be forwarded to our Secretary so that it is received no later than October 11, 2018, which is the date 120 calendar days prior to the anniversary of the mailing date of the proxy statement for the 2018 Annual Meeting. Any such proposal must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Proxy Access to Include Nominees in our 2019 Proxy Statement. Under our new proxy access bylaw, if a stockholder (or a group of up to 20 stockholders) owning at least 3% of the number of outstanding shares of common stock continuously for at least three years, and meeting the other requirements specified in our bylaws, wishes to include director nominees (up to the greater of two nominees or 20% of the Board) in our proxy statement and form of proxy used in connection with the 2019 Annual Meeting, notice must be received by our Secretary at our principal offices, no later than October 11, 2018, which is the date 120 days prior to the anniversary of the mailing date of the proxy statement for the 2018 Annual Meeting and no earlier than September 11, 2018, which is the date 150 days prior to the anniversary of the mailing date of the proxy statement for the 2018 Annual Meeting. However, in the event that the date of the 2019 Annual Meeting is advanced by more than 30 days, or delayed by more than 30 days from such anniversary date, notice by the stockholder, to be timely, must be so delivered no later than the close of business on the later of the 180th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Any such notice must comply with the requirements set out in our bylaws.

Nominees or Proposals not for Inclusion in our 2019 Proxy Statement. Under our bylaws, if a stockholder, rather than including a proposal in the proxy statement as discussed above, seeks to propose business for consideration at the 2019 Annual Meeting, notice must be received by our Secretary at our principal offices, no later than December 22, 2018, which is the date 90 days prior to the first anniversary of the 2018 Annual Meeting and no earlier than November 22, 2018, which is the date 120 days prior to the first anniversary of the 2018 Annual Meeting. However, in the event that the date of the 2019 Annual Meeting is advanced by more than 30 days, or delayed by more than 60 days from such anniversary date, notice by the stockholder, to be timely, must be so delivered no later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made and no earlier than 120 days prior to such annual meeting. Any such notice must comply with the requirements set out in our bylaws.

The mailing address for our Secretary is our principal offices at 88 W. Plumeria Drive, San Jose, CA 95134.

4 2018 Proxy Statement DIRECTOR INDEPENDENCE AND CORPORATE GOVERNANCE

Director Independence For a member of our Board to be considered independent under NYSE rules, our Board must determine that the director does not have a material relationship (as described below) with us and/or our consolidated subsidiaries (either directly or as a partner, stockholder, or officer of an organization that has a relationship with any of those entities).

Our Board has undertaken a review of our directors’ independence in accordance with standards that our Board and our Corporate Governance and Nominating Committee have established to assist our Board in making independence determinations. Any relationship listed under the heading “Material Relationships” below will, if present, be deemed material for the purposes of determining director independence. If a director has any relationship that is considered material, the director will not be considered independent. Any relationship listed under the heading “Immaterial Relationships” below will, if present, be considered categorically immaterial for the purpose of determining director independence. Multiple Immaterial Relationships will not collectively create a Material Relationship that would cause the director to not be considered independent. In addition, the fact that a particular relationship is not addressed under the heading “Immaterial Relationships” will not automatically cause a director to not be independent. If a particular relationship is not addressed under the standards established by our Board, our Board will review all of the facts and circumstances of the relationship to determine whether or not the relationship, in our Board’s judgment, is material.

Our Board has determined that Mr. Alspaugh, Ms. Austin, Dr. Black, Mr. Hart, Mr. Henske, Mr. Klane, Mr. Schwartz, Ms. Thompson and Mr. Trollope are independent under NYSE rules. Former director Eitan Raff, whose Board service ended December 19, 2017, had been determined by our Board to be independent. Mr. Galant has been determined by our Board not to be independent.

Material Relationships Any of the following shall be considered material relationships that would prevent a director from being determined to be independent: Auditor Affiliation. The director is a current partner or employee of our internal or external auditor; a member of the director’s immediate family (including the director’s spouse; parents; children; siblings; mothers-, fathers-, brothers-, sisters-, sons- and daughters-in-law; and anyone who shares the director’s home, other than household employees) is a current employee of such auditor who participates in the firm’s audit, assurance, or tax compliance (but not tax planning) practice or a current partner of such auditor; or the director or an immediate family member of the director was a partner or employee of such a firm and personally worked on our audit within the last five years.

Business Transactions. The director is an employee of another entity that, during any one of the past five years, received payments from us, or made payments to us, for property or services that exceeded the greater of $1 million or 2% of the other entity’s annual consolidated gross revenues, or a member of the director’s immediate family has been an executive officer of another entity that, during any one of the past five years, received payments from us, or made payments to us, for property or services that exceeded the greater of $1 million or 2% of the other entity’s annual consolidated gross revenues.

Employment. The director was our employee at any time during the past five years or a member of the director’s immediate family was one of our executive officers in the prior five years. However, the employment of a director on an interim basis as Chair of the Board, Chief Executive Officer or other executive officer of Verifone shall not disqualify a director from being considered independent following that employment.

Interlocking Directorships. During the past five years, the director or an immediate family member of the director was employed as an executive officer by another entity where one of our current executive officers served at the same time on the compensation committee (or similar committee) of that company.

Other Compensation. A director or an immediate family member of a director received more than $100,000 per year in direct compensation from us, other than director and committee fees, in the past five years.

2018 Proxy Statement 5 Investment Banking or Consulting Services. A director is a partner or officer of an investment bank or consulting firm that performs substantial services to us on a regular basis.

Immaterial Relationships The following relationships shall be deemed immaterial and will not be considered for purposes of determining director independence: Affiliate of Stockholder. A relationship arising solely from a director’s status as an executive officer, principal, equity owner, or employee of an entity that is one of our stockholders.

Certain Business Transactions. A relationship arising solely from a director’s status as an executive officer, employee or equity owner of an entity that has made payments to or received payments from Verifone for property or services shall not be deemed a material relationship or transaction that would cause a director not to be independent so long as the payments made or received during any one of such other entity’s last five fiscal years are not in excess of the greater of $1 million or 2% of such other entity’s annual consolidated gross revenues.

Director Fees. The receipt by a director from us of fees for service as a member of our Board and committees of our Board.

Other Relationships. Any relationship or transaction that is not covered by any of the standards listed above in which the amount involved does not exceed $25,000 in any fiscal year shall not be deemed a material relationship or transaction that would cause a director not to be independent.

Notwithstanding the foregoing, no relationship shall be deemed categorically immaterial as described above to the extent that it is required to be disclosed in SEC filings under Item 404 of the SEC’s Regulation S-K.

Corporate Governance Guidelines Our Board has adopted Corporate Governance Guidelines that provide the framework within which our Board directs our corporate governance. Our Corporate Governance and Nominating Committee reviews these guidelines annually and recommends changes to our Board for approval as appropriate. Our Corporate Governance Guidelines are available on the Investor Relations section of our website, http://ir.verifone.com, and are available in print to any stockholder who requests it.

Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics, which is available on the Investor Relations section of our website, http://ir.verifone.com, and is available in print to any stockholder who requests it. The Code of Business Conduct and Ethics applies to all of our employees, officers and directors, unless prohibited by law or union agreement. We will post any amendments to or waivers from a provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and that relate to any element of the “code of ethics” definition set forth in Item 406(b) of the SEC’s Regulation S-K at http://ir.verifone.com.

Director Attendance at Meetings Although our Board recognizes that scheduling conflicts may occasionally prevent a director from attending a Board or stockholder meeting, our Board expects each director to make every reasonable effort to keep such absences to a minimum. During fiscal 2017, each of our directors attended not less than 75% of the total number of meetings of our Board and the committees of our Board on which such director served. At the 2017 Annual Meeting of Stockholders, all of our directors then in office were in attendance. In fiscal 2017, our Board held a total of seven meetings.

Executive Sessions Non-employee directors meet in executive session without any management directors or employees present at each regularly scheduled Board meeting. The presiding director at these meetings is Mr. Hart, the Chair of the Board.

6 2018 Proxy Statement Communications with Directors Any interested party may direct communications to individual directors, including the Chair of the Board, a board committee, the independent directors as a group or our Board as a whole, by addressing the communication to the named individual, to the committee, the independent directors as a group or our Board as a whole c/o Secretary, VeriFone Systems, Inc., 88 W. Plumeria Drive, San Jose, CA 95134. Our Secretary or an Assistant Secretary will review all communications so addressed and will relay to the addressee(s) all communications determined to relate to our business, management or governance.

Committees of our Board of Directors Our Board has an Audit Committee, a Compensation and Leadership Development Committee and a Corporate Governance and Nominating Committee.

Audit Committee Our Board has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. Our Board has adopted an Audit Committee charter, which is available on the Investor Relations section of our website at http://ir.verifone.com, and is available in print to any stockholder who requests it, and defines our Audit Committee’s duties and responsibilities to include: • Appointment, compensation, retention and oversight of the work of our independent registered public accounting firm; • Pre-approving all audit and non-audit services provided by our independent registered public accounting firm; • Reviewing the appointment, replacement, reassignment or dismissal of the Chief Audit Executive, who is vested with oversight of and responsibility for our global internal audit activities; • Discussing with our independent registered public accounting firm the overall scope and plans for its audits and regularly reviewing with our independent registered public accounting firm, and discussing with management, and if appropriate, the Chief Audit Executive, any difficulties encountered during the course of the audit work; • Discussing at least annually with the Chief Audit Executive the overall scope and plans for internal audits and any difficulties encountered in the course of internal audits; • Reviewing and discussing the financial statements, including with management and our independent registered public accounting firm; • Reviewing and discussing with management, the internal auditors and our independent registered public accounting firm the assessment of the effectiveness of internal control over financial reporting; • Discussing with appropriate counsel any significant legal, compliance or regulatory matters that may have a material effect on the financial statements or our business; • Preparing an annual Report of our Audit Committee for inclusion in our annual report on Form 10-K and definitive proxy statement; • Reviewing and approving related party transactions; • Reviewing our compliance systems with respect to legal and regulatory requirements; and • Discussing our policies with respect to risk assessment and risk management.

Our Audit Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of our Audit Committee. Our Audit Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent registered public accounting firm, provided that any pre-approvals made under delegated authority are presented to our Audit Committee at its next scheduled meeting.

In fiscal 2017, our Audit Committee met nine times, and met in executive session without management present at each such meeting. Our Board and our Corporate Governance and Nominating Committee have

2018 Proxy Statement 7 determined that each member of our Audit Committee is “independent” within the meaning of the rules of both the NYSE and the SEC.

The report of our Audit Committee is included in this Proxy Statement under “Report of the Audit Committee.”

Compensation and Leadership Development Committee Our Board has adopted a Compensation and Leadership Development Committee charter, which is available on the Investor Relations section of our website at http://ir.verifone.com, and is available in print to any stockholder who requests it, which defines our Compensation and Leadership Development Committee’s duties and responsibilities to include: • Reviewing and approving corporate goals and objectives relevant to the compensation of our CEO, evaluating our CEO’s performance in light of these goals and objectives and, either as a committee or together with the other independent directors (as directed by our Board), determining and approving our CEO’s compensation based on this evaluation; • Determining and approving non-CEO executive officer compensation, making recommendations to our Board with respect to incentive compensation plans and equity-based plans, including the VeriFone Bonus Plan and the 2006 Equity Incentive Plan, administering these plans, and discharging any responsibilities imposed on our Compensation and Leadership Development Committee by any of these plans; • Approving any new equity-based plan or any material change to an existing plan where stockholder approval is not required and thus has not been obtained; • Overseeing, in consultation with management, regulatory compliance with respect to compensation matters, including overseeing our policies on structuring compensation programs to preserve tax deductibility; • Reviewing and approving any severance or similar arrangements proposed to be made to our CEO and any of the non-CEO executive officers, including arrangements for compensation following a change in control of the Company; • Preparing an annual Report of our Compensation and Leadership Development Committee for inclusion in our annual report on Form 10-K and definitive proxy statement; • Annually assessing the risks associated with our compensation programs, policies and practices applicable to employees to determine whether the risks arising from such programs, policies and practices are appropriate or reasonably likely to have a material adverse effect on the Company; and • Overseeing the development and review of succession plans for our CEO’s direct reports and other key executive positions identified by our CEO, periodically reviewing such plans with our Board and overseeing the development of executive leadership of the Company.

Our Compensation and Leadership Development Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to such standing or ad hoc subcommittees as it may determine to be necessary or appropriate for the discharge of its responsibilities, as long as the subcommittee contains at least the minimum number of directors necessary to meet any regulatory requirements.

In fiscal 2017, our Compensation and Leadership Development Committee met four times, and met in executive session without management present at each such meeting.

Our Board and our Corporate Governance and Nominating Committee have determined that each member of our Compensation and Leadership Development Committee is “independent” within the meaning of the rules of both the NYSE and the SEC.

The annual report of our Compensation and Leadership Development Committee is included in this Proxy Statement under “Report of the Compensation and Leadership Development Committee.”

8 2018 Proxy Statement Corporate Governance and Nominating Committee Our Board has adopted a Corporate Governance and Nominating Committee charter, which is available on the Investor Relations section of our website at http://ir.verifone.com and is available in print to any stockholder who requests it. Our Corporate Governance and Nominating Committee charter defines our Corporate Governance and Nominating Committee’s purposes and responsibilities to include: • Making recommendations to our Board from time to time as to changes that our Corporate Governance and Nominating Committee believes to be desirable as to the size of our Board or any committee thereof; • Identifying individuals believed to be qualified to become Board members, consistent with criteria approved by our Board, and selecting, or recommending to our Board, the nominees to stand for election as directors at the annual meeting of stockholders or, if applicable, at a special meeting of stockholders; • Developing and recommending to our Board standards to be applied in making determinations as to the absence of material relationships between Verifone and a director; • Identifying Board members qualified to fill vacancies on any committee of our Board (including our Corporate Governance and Nominating Committee) and recommending that our Board appoint the identified member or members to the respective committee; • Establishing procedures for our Corporate Governance and Nominating Committee to exercise oversight of the evaluation of our Board; • Reviewing periodically and making recommendations to our Board with respect to non-employee director compensation; • Developing and recommending to our Board a set of corporate governance principles applicable to Verifone and reviewing those principles at least once a year; • Assisting management in the preparation of the disclosure in our annual proxy statement regarding the operations of our Corporate Governance and Nominating Committee; • Recommending ways to enhance communications and relations with our stockholders; and • Reviewing proposals by our stockholders and proposed responses.

Our Corporate Governance and Nominating Committee has not established specific minimum education, experience or skill requirements for potential members, but, in general, expects that qualified candidates will have high-level managerial experience in a complex and/or global organization and will be able to represent the interests of the stockholders as a whole and not just certain special interest groups or constituencies. Our Corporate Governance and Nominating Committee considers each candidate’s judgment, skill, diversity and professional experience with businesses and other organizations of comparable size in the context of the needs of our Board, the interplay of the candidate’s experience with the experience of other Board members and the extent to which the candidate would be a desirable addition to our Board and any committees of our Board. At this stage of our development, relevant experiences include, among other things, large-company CEO experience, senior management experience in the payments industry, senior-level experience at multi-national companies with oversight over international operations and financial and accounting expertise and executive-level experience relevant to our key strategic initiatives, such as expertise in the payments industry, information technology and enterprise system security, mobile payments, e-commerce, software and services. In addition, each candidate is expected to contribute positively to the existing chemistry and collaborative culture among Board members and must have the time and ability to make a constructive contribution to our Board. Our Corporate Governance and Nominating Committee also values work ethic, leadership, problem-solving skills and diversity in selecting nominees to serve on our Board and is committed to actively seeking out highly qualified individuals to contribute to the diversity of the pool from which Board nominees are chosen. Although our Corporate Governance and Nominating Committee does not have a formal policy on diversity, our Corporate Governance and Nominating Committee broadly construes diversity to mean a variety of opinions, perspectives, expertise, personal and professional experiences and backgrounds (including gender, race and ethnicity), as well as other differentiating characteristics. Our Board and each of the committees of our Board engage in an annual self-evaluation, which includes an evaluation of the diversity of our Board, and our Corporate Governance and Nominating Committee discusses the value of diversity during its annual review of Board composition.

2018 Proxy Statement 9 Our Corporate Governance and Nominating Committee has generally identified nominees based upon suggestions by directors, management, outside consultants, including third-party search firms, and stockholders. Before considering any nominee, our Corporate Governance and Nominating Committee makes a preliminary determination as to the need for additional members of our Board. If a need is identified, members of our Corporate Governance and Nominating Committee discuss and evaluate possible candidates in detail and suggest individuals to explore in more depth. Once a candidate is identified for further consideration, members of our Corporate Governance and Nominating Committee, as well as other members of our Board and management, as appropriate, interview the nominee. After completing this evaluation, our Corporate Governance and Nominating Committee makes a recommendation and refers the nominee to the full Board for consideration. Our Corporate Governance and Nominating Committee will consider candidates recommended by stockholders in the same manner as other candidates. Stockholders may nominate candidates for director in accordance with the advance notice and other procedures contained in our bylaws.

Our Corporate Governance and Nominating Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of our Corporate Governance and Nominating Committee.

In fiscal 2017, our Corporate Governance and Nominating Committee met four times, and met in executive session without management present at each such meeting.

Our Board and our Corporate Governance and Nominating Committee have determined that each member of our Corporate Governance and Nominating Committee is “independent” within the meaning of the rules of both the NYSE and the SEC.

The annual report of our Corporate Governance and Nominating Committee is included in this Proxy Statement under “Report of the Corporate Governance and Nominating Committee.”

Director Stock Ownership Guidelines In December 2015, our Board adopted revised stock ownership guidelines for our non-employee directors to increase their required level of common stock ownership. These revised stock ownership guidelines require each non-employee director to own a minimum number of shares of our common stock valued at four times the director’s annual cash retainer. Any non-employee director who fails to meet or maintain the applicable ownership level by the required time frame will be required to retain all shares of our common stock acquired upon the exercise of stock options or vesting of restricted stock or restricted stock unit (“RSU”) awards, net of shares withheld for taxes and payment of the exercise price, if any, until such ownership guidelines are satisfied.

10 2018 Proxy Statement OUR BOARD OF DIRECTORS

Board Leadership Structure Under our current Corporate Governance Guidelines, our Board is free to select its Chair and our CEO in the manner it considers to be in our best interests at any given point in time. Since 2008, the positions of Chair of the Board and CEO have been held by separate persons. Our Board believes that this structure is appropriate for us because it allows our CEO to focus his time and energy on leading our key business and strategic initiatives while our Board focuses on oversight of management, overall enterprise risk management and corporate governance. Our Board and its committees meet throughout the year on a set schedule, usually at least once a quarter, and also hold special meetings from time to time. Agendas and topics for Board and committee meetings are developed through discussions between management and members of our Board and its committees. Information and data that are important to the issues to be considered are distributed in advance of each meeting. Board meetings and background materials focus on key strategic, operational, financial, enterprise risk, governance and compliance matters applicable to us, including the following: • Reviewing quarterly our business, operations and performance; • Reviewing progress of strategic initiatives and longer-term strategic and business plans; • Reviewing key product, market, industry and competitive issues; • Reviewing and approving material investments or acquisitions, strategic transactions and other significant transactions that are not in the ordinary course of business; • Overseeing our compliance with legal and regulatory requirements; • Reviewing our financial results; • Overseeing overall insurance structure and policies, including director and officer insurance levels; • Overseeing our enterprise risk management strategy and evaluating our risk exposure and ways to mitigate that risk; • Reviewing our management succession plan for the CEO and other executive officers; • Evaluating the performance of our Board and reviewing and determining the qualifications of directors and mix of expertise and other attributes of directors, including the financial expertise of members of our Audit Committee; • Reviewing and determining the independence of our directors, the appointment of the Chair of the Board and the selection of Board committee members; • Selecting and approving director nominees; and • Reviewing and approving director compensation, executive compensation and overall compensation plans.

Board’s Role in Risk Oversight Our Board executes its risk management responsibility directly and through its committees. As set forth in its charter and annual work plan, our Audit Committee has primary responsibility for overseeing our enterprise risk management process. Our Audit Committee receives updates and discusses individual and overall risk areas during its meetings, including financial risk assessments, operations risk management policies, major financial risk exposures, exposures related to compliance with legal and regulatory requirements, and management’s actions to monitor and control such exposures. Our Vice President of Internal Audit reviews with our Audit Committee our annual operational risk assessment results and at least once each quarter the results of internal audits, including the adequacy of internal controls over financial reporting. Our Vice President of Internal Audit and Chief Information Officer report regularly to our Audit Committee on information systems controls, information security and cybersecurity. Throughout each fiscal year, our Audit Committee invites appropriate members of management to its meetings to provide enterprise-level reports on areas relevant to our Audit Committee’s oversight role, including adequacy and effectiveness of management reporting and controls systems used to monitor adherence to policies and approved guidelines, information systems and security over systems and data, treasury, insurance structure and coverage, tax structure and planning, disaster recovery planning and the overall

2018 Proxy Statement 11 effectiveness of our operations risk management policies. Our Audit Committee is generally scheduled to meet at least twice a quarter, and generally covers one or more areas relevant to its risk oversight role in at least one of these meetings. At least once a quarter our Audit Committee meets with our independent registered public accounting firm separately in executive session. At each meeting, our Audit Committee also reviews with our General Counsel and Chief Compliance Officer any significant compliance matters, including matters raised through internal audit reviews and our alert line.

Our Compensation and Leadership Development Committee monitors the risks associated with our compensation programs, policies and practices with respect to executive compensation and executive recruitment and retention, as well as compensation generally. In establishing and reviewing our executive compensation program, our Compensation and Leadership Development Committee consults with its independent compensation consultant and seeks to structure the program so as to not encourage unnecessary or excessive risk taking. Our executive compensation program utilizes a mix of base salary and short-term and long-term incentive awards designed to align our executive officers’ compensation with our success, particularly with respect to financial performance and increasing stockholder value. Our Compensation and Leadership Development Committee sets the amount of our executive officers’ base salaries at the beginning of each fiscal year. A substantial portion of our executive officers’ annual short-term incentive opportunities, which are cash based, are tied to overall corporate performance and increasing stockholder value. The target total direct compensation opportunities of our executive officers also includes long-term incentive compensation in the form of equity awards that help align their interests with those of our stockholders over the longer term. In general, short-term incentive opportunities may be reduced at the discretion of our Compensation and Leadership Development Committee based on individual performance. Our Compensation and Leadership Development Committee believes that our annual short-term incentive opportunities and long-term equity awards provide an effective and appropriate mix of incentives to help ensure our performance is focused on long-term stockholder value creation and do not encourage short-term risk taking at the expense of long-term results. Our Compensation and Leadership Development Committee has concluded that our executive compensation program does not encourage unnecessary or excessive risk taking. Our Compensation and Leadership Development Committee has also reviewed our compensation programs for employees generally and has concluded these programs do not create risks that are reasonably likely to have a material adverse effect on Verifone.

Our Corporate Governance and Nominating Committee oversees risks related to our overall corporate governance, including development of corporate governance principles applicable to us, evaluation of federal securities laws and regulations with respect to our insider trading policy, development of standards to be applied in making determinations as to the absence of material relationships between us and a director and formal periodic evaluations of our Board and management. Our Corporate Governance and Nominating Committee seeks to align our governance practices with best practices among peer companies and considers recommendations by shareholder advisory organizations with respect to corporate governance.

Reports delivered by all of our committee chairs on at least a quarterly basis keep our Board abreast of its committees’ risk oversight and other activities.

Majority Voting Provision Our bylaws and the Corporate Governance Guidelines provide that, in an uncontested election of directors, each director shall be elected by a majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee), and in a contested election, each director shall be elected by a plurality of the votes cast (meaning that the ten nominees receiving the highest number of votes “for” will be elected even if any such nominee receives less than a majority of the votes cast). A contested election is defined as an election for which our Corporate Secretary determines that the number of director nominees exceeds the number of directors to be elected as of the date that is ten days preceding the date we first mail our notice of meeting for such meeting to stockholders.

Under our Corporate Governance Guidelines, any nominee in an uncontested election who receives a greater number of “against” votes than “for” votes shall promptly tender his or her resignation following certification of the vote. Our Corporate Governance and Nominating Committee shall consider the resignation offer and shall recommend to our Board the action to be taken. In considering whether to recommend accepting or rejecting the tendered resignation, our Corporate Governance and Nominating Committee will consider all factors that it deems relevant including, but not limited to, any reasons stated by stockholders for their “against” or

12 2018 Proxy Statement “withheld” votes for election of the director, the length of service and qualifications of the director, our Corporate Governance Guidelines and the director’s overall contributions as a member of our Board. Our Board will consider these and any other factors it deems relevant, as well as our Corporate Governance and Nominating Committee’s recommendation, when deciding whether to accept or reject the tendered resignation. Any director whose resignation is under consideration shall not participate in our Corporate Governance and Nominating Committee deliberation and recommendation or Board deliberation and action regarding whether to accept the resignation. Our Board shall take action within 90 days following certification of the vote, unless a longer period of time is necessary in order to comply with any applicable NYSE or SEC rule or regulation, in which event our Board shall take action as promptly as is practicable while satisfying such requirements. We will promptly disclose the decision and the reasons therefor in a Current Report on Form 8-K furnished to the SEC.

Proxy Access In December 2016, our Board adopted “proxy access” amendments to our bylaws, enabling a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to two nominees or 20% of our Board, whichever is greater, provided that the stockholder(s) and nominee(s) satisfy the requirements set forth in our bylaws.

Biographical Information Regarding Our Director Nominees Certain biographical information regarding our director nominees is set forth below. In each individual’s biography we have highlighted specific experience, qualifications, attributes and skills that led our Board to conclude that each individual should serve or continue to serve as a director of our Board. In addition to these specific attributes, all of our director nominees have public company leadership experience, significant expertise in one or more areas of importance to our business and strategy, high-level managerial experience in relatively complex organizations or are accustomed to dealing with complex problems. We believe all of our director nominees are individuals of high character and integrity, are able to work well with others, and have sufficient time to devote to the affairs of our Company.

Robert W. Alspaugh. Mr. Alspaugh, age 70, has served as a director since September 2008. From 2002 to 2006, Mr. Alspaugh served as CEO of KPMG International and from 1998 to 2002, Mr. Alspaugh served as Deputy Chair and Chief Operating Officer of KPMG’s U.S. Practice. He joined KPMG in 1969 and was elected partner in 1978. In addition to providing more than ten years of service on the management committee and four years on the board of directors of KPMG, Mr. Alspaugh served on the board of KPMG International and was responsible for implementing the strategy of the global organization, which included member firms in 150 countries and more than 100,000 employees. Mr. Alspaugh holds a BBA degree (summa cum laude)in accounting from Baylor University. Mr. Alspaugh is currently a member of the boards of directors of Ball Corp., a supplier of metal and plastic packaging for beverages, food and household products, and of aerospace technologies and services to defense and civilian government agencies, Autoliv, Inc., a developer, manufacturer and supplier of safety systems to the automotive industry and Triton Container International, Ltd., a leader in container leasing. Mr. Alspaugh also serves on the board of directors of DSGI Technologies, Inc., a privately-held company. Among other skills and qualifications, Mr. Alspaugh brings to our Board substantial global financial management and accounting expertise which is relevant to our business and has led our Board to determine that he is an “audit committee financial expert” as defined by the SEC. Additionally, Mr. Alspaugh’s extensive global management and leadership experience is relevant to his oversight role on our Audit Committee given the global nature of our operations and the related complexities. Mr. Alspaugh serves as the Chair of our Audit Committee and also serves on our Corporate Governance and Nominating Committee. Mr. Alspaugh serves as chair of the audit committees of Triton Container, Autoliv and Ball Corp. He also serves on the compliance committee for Autoliv and the finance committee for Ball Corp.

Karen Austin. Ms. Austin, age 56, has served as a director since June 2014. Ms. Austin has served as Senior Vice President and Chief Information Officer of Pacific Gas & Electric Company, a natural gas and electric utilities company headquartered in California, since June 2011. Before joining PG&E, Ms. Austin served as Senior Vice President and President of Consumer Electronics of Sears Holdings Corporation from January 2009 to May 2011 and as its Executive Vice President and Chief Information Officer from March 2005 to January 2009. Ms. Austin joined Kmart Corporation in 1984 and served, before its merger with Sears, Roebuck and Co. in 2005,

2018 Proxy Statement 13 as its Senior Vice President and Chief Information Officer from April 2002 to March 2005 and Vice President, Applications from January 2000 to April 2002. Ms. Austin brings to our Board her strong expertise in cybersecurity, information technology, change management, engineering, enterprise system security and technical operations, with extensive experience in retail operations and deep knowledge of technology company operating environments. Such experience and qualifications provide unique and valuable insight on our Board’s oversight of our business strategy, and, in particular, our transformation initiatives. Ms. Austin serves on our Audit Committee. Ms. Austin holds a B.S. degree in Computer Science from Trine University.

Ronald Black, Ph.D. Dr. Black, age 54, has served as a director since December 2017. Dr. Black has led Rambus Inc. as its Chief Executive Officer, President and a member of the Board of Directors since June 2012. Rambus is a creator and innovator of hardware, software and services that drive technology advancements from the data center to the mobile edge. Prior to joining Rambus, Dr. Black was the Chief Executive Officer of MobiWire, formerly Sagem Wireless, a privately-held mobile handset company headquartered near Paris, France that offers products and services to original equipment manufacturers and mobile network operators in the mobile phone marketplace, and before that was Chair and CEO of UPEK, Inc. Dr. Black currently serves as a director of Energy Focus Inc., a publicly-held LED lighting technology developer, Microfabrica Inc., a privately held high precision metal parts fabricator, and FlexEnable Limited, a privately held producer of flexible electronics manufacturing platforms. Dr. Black serves on our Audit Committee. Dr. Black holds a B.S., M.S., and Ph.D. in materials science and engineering from Cornell University. Mr. Black brings to our Board his experience as a chief executive officer of a number of high-tech companies, both domestic and foreign, as well as his deep technical and product expertise.

Paul Galant. Mr. Galant, age 50, has served as our CEO and a director since October 2013. Prior to joining Verifone, Mr. Galant served as the CEO of Citigroup Inc.’s Enterprise Payments business since 2010. In this role, Mr. Galant oversaw the design, marketing and implementation of global business-to-consumer and consumer-to-business digital payments solutions. From 2009 to 2010, Mr. Galant served as CEO of Citi Cards, heading Citigroup’s North American and International Credit Cards business. From 2007 to 2009, Mr. Galant served as CEO of Citi Transaction Services, a division of Citi’s Institutional Clients Group. From 2002 to 2007, Mr. Galant was the Global Head of the Cash Management business, one of the largest processors of payments globally. Mr. Galant joined Citigroup, a multinational financial services corporation, in 2000. Prior to joining Citigroup, Mr. Galant held positions at Donaldson, Lufkin & Jenrette, Smith Barney, and Credit Suisse. Mr. Galant holds a Bachelor’s degree from Cornell University where he graduated a Phillip Merrill Scholar. Mr. Galant currently serves on the board of directors of Conduent Inc., a publicly-held business process services provider and APX Group Holdings, Inc., a privately-held home automation services provider. Mr. Galant brings to our Board, among other skills and qualifications, leadership and expertise with respect to global payments solutions, broad knowledge of the payments and financial services industries, and leadership and management of complex, global organizations.

Alex W. (Pete) Hart. Mr. Hart, age 77, has served as a director since July 2006 and as the Chair of the Board since June, 2014. Mr. Hart has been an independent consultant to the financial services industry since November 1997. From August 1995 to November 1997, he served as CEO and from March 1994 to August 1995 as Executive Vice Chair of Advanta Corporation, a diversified financial services company. From 1988 to 1994, he was President and CEO of MasterCard International, the worldwide payment service provider. Mr. Hart holds a bachelor degree in social relations from Harvard University. He is currently a member of the board of directors of Mitek Systems, Inc., a mobile video technology company. Mr. Hart also serves as a director and member of the compensation committee for BrightVolt, Inc. (formerly Solicore, Inc.), a private company that develops and manufactures embedded power solutions. From April 2001 until April 2012, Mr. Hart served as Chair of the Board and a director of SVB Financial Group. Mr. Hart also previously served on the board of directors and compensation committee of Fair Isaac Corporation, a predictive software company. From February 2001 to November 2015, Mr. Hart also served as a director of Global Payments, Inc., a provider of payment technology services. Among other skills and qualifications, Mr. Hart has been an active participant in the payments and financial services industry for more than 40 years, including as senior executive, director and consultant, and further, Mr. Hart’s payments industry experience ranges from executive roles at banks, issuers, acquirers and card associations, all of which provide unique insight into our business operations and strategy. The wide spectrum of Mr. Hart’s business and professional experience within the payments industry strongly complements the attributes of our other directors. Mr. Hart serves on our Corporate Governance and Nominating Committee. He also serves as chair of the compensation committee and as a member of the governance committee of Mitek.

14 2018 Proxy Statement Robert B. Henske. Mr. Henske, age 56, has served as a director since January 2005. Mr. Henske served as a Managing Director at Hellman & Friedman LLC from July 2007 through 2014, and as a Senior Advisor from 2014 to 2016. From May 2005 until July 2007, he served as Senior Vice President and General Manager of the Consumer Tax Group of Intuit Inc. He was Intuit’s CFO from January 2003 to September 2005. Prior to joining Intuit, he served as Senior Vice President and CFO of Synopsys, Inc., a supplier of electronic design automation software, from May 2000 until January 2003. From January 1997 to May 2000, Mr. Henske was a partner at Oak Hill Capital Management, a Robert M. Bass Group private equity investment firm. Prior to that he was a Partner at Bain & Company. He holds a B.Sc. degree in Chemical Engineering from Rice University and a M.B.A. (with distinction) in Finance and Strategic Management from The Wharton School at the University of Pennsylvania. Mr. Henske serves on the board of directors of Blackhawk Network Holdings, Inc., a prepaid payment network company. Mr. Henske was previously a member of the boards of directors of Applied Systems, Inc., Ellucian (formerly Datatel, Inc.) (as chair), Associated Materials LLC, Goodman Global, Inc., Activant Solutions (as chair), Iris Software Ltd. (as chair), OpenLink Financial (as chair), SSP Holdings (as chair), Williams Scotsman, Grove Worldwide, Reliant Building Products and American Savings Bank. In addition to other skills and qualifications, Mr. Henske brings to our Board significant finance and accounting experience through his former roles as CFO of large, global companies in the high technology industry. Mr. Henske’s leadership and management experiences, including his service as a director and committee member on the boards of a number of companies, provide valuable insight on dynamics and operation of our Board, particularly in its oversight role. Mr. Henske is Chair of our Compensation and Leadership Development Committee and also serves on our Corporate Governance and Nominating Committee. Larry A. Klane. Mr. Klane, age 57, has served as a director since December 2017. Mr. Klane is a Co-Founding Principal at Pivot Investment Partners LLC, an investment firm founded in 2014 that is exclusively focused on financial technology and financial services companies. Prior to Pivot, Mr. Klane was the Global Financial Institutions Leader at Cerberus Capital Management. In this capacity, he worked to maximize the value of the firm’s financial services activities, including new transactions as well as the existing portfolio of companies. He served on the Board of Directors of Aozora Bank, a publicly-traded bank in Japan in which Cerberus held a controlling interest. Mr. Klane joined Cerberus after serving as Chair and CEO of Korea Exchange Bank, a leading publicly-traded Korean commercial and retail bank of approximately $100 billion of assets with an international presence. He led the bank through the global financial crisis to the landmark sale by the Bank’s major private equity shareholder, the largest transaction in Korean banking history. He served as CEO from April 2009 to February 2012 and as Chair from November 2010 to February 2012. Prior to leading Korea Exchange Bank, Mr. Klane was President of the Global Financial Services division of Capital One Financial Corporation. He joined Capital One in 2000 to help lead Capital One’s transformation to a diversified financial services business. His responsibilities during his tenure at Capital One included a broad range of consumer and business finance activities in the United States, Europe and Canada. He also oversaw all merger and acquisition activities. He served as President and Director of Capital One Federal Savings Bank as well as Chair of the Board of Capital One Bank (Europe) Plc based in London, both subsidiaries of Capital One Financial Corp. Mr. Klane currently serves as a director of Nexi Group S.p.A, a leading privately held company in Italian payments, as well as Ethoca Limited, a privately held global network between issuers and merchants. Mr. Klane serves on our Compensation and Leadership Development Committee. He is a graduate of Harvard College and the Stanford Graduate School of Business. Mr. Klane brings to our Board his experience as a chief executive officer as well as his extensive background in financial services and payments. Jonathan I. Schwartz. Mr. Schwartz, age 52, has served as a director since June 2014. Mr. Schwartz has served as the CEO and President of Care Zone Inc., an Internet service for family caregivers, since April 2010. From 1996 to February 2010, Mr. Schwartz served in various capacities at Sun Microsystems, Inc. prior to its acquisition by Oracle Corporation, including from April 2006 to February 2010 as CEO and a member of the board of directors. Prior to Sun, Mr. Schwartz was the founder, President and CEO of Lighthouse Design, Ltd., which was ultimately acquired by Sun in 1996, and began his career with McKinsey & Company, Inc. Mr. Schwartz serves on our Compensation and Leadership Development Committee. Mr. Schwartz was previously a member of the board of directors of Silver Spring Networks, Inc. Mr. Schwartz brings to our Board proven operational and strategic expertise, with a strong background in technology and solutions. His experience as chief executive officer of a number of high-tech companies, as well as board and committee member of other high-tech public and private companies, provides our Board an important perspective in overseeing our business operations and strategy. Mr. Schwartz holds a B.A. in Mathematics and Economics from Wesleyan University. Jane J. Thompson. Ms. Thompson, age 66, has served as a director since March 2014. She is the founder and CEO of Jane J. Thompson Financial Services LLC, a management consulting firm advising businesses in

2018 Proxy Statement 15 payments and financial services. From May 2002 to June 2011, Ms. Thompson founded and served as President of Walmart Financial Services, a division of Wal-Mart Stores, Inc. Previously, she led the Sears Credit, Sears Home Services, and Sears Online groups within Sears, Roebuck & Company, and was a partner with McKinsey & Company, Inc. Ms. Thompson serves on our Compensation and Leadership Development Committee and is the Chair of our Corporate Governance and Nominating Committee. Ms. Thompson also serves on the board of directors of Blackhawk Network Holdings, Inc., a prepaid payment network company, and its compensation committee; on the board of directors of On Deck Capital, Inc., an online lender to small businesses, and its risk management and audit committees; on the board of directors of Navient Corporation, a leading asset management and business processing services company, and its compensation and finance/operations committees; and on the board of Mitek Systems, Inc., a software solutions company in mobile capture and identity verification, and its compensation and governance nominating committees. From 2012 to 2016 she served on the board of directors of Fresh Market, Inc., a specialty food retailer, and its audit and nominating committees. Ms. Thompson also serves on the board of Pangea Universal Holdings, Inc., a privately-held global mobile centric money transfer platform company, and its audit committee. Ms. Thompson brings to our board of directors extensive management experience leading multi-billion dollar organizations in the financial services, home services, retail and e-commerce industries, with expertise in the evolving relationship between retailers and consumers, as well as experience driving strategy and growth for large corporations. Ms. Thompson received a Master’s in Business Administration from Harvard Business School, where she was a Baker Scholar, and a Bachelor’s of Business Administration (summa cum laude) in Marketing from the University of Cincinnati.

Rowan Trollope. Mr. Trollope, age 45, has served as a director since May 2017. Mr. Trollope is a 26-year veteran of the enterprise software industry. He is currently Senior Vice President and General Manager, Applications Division at Cisco Systems, Inc., an information technology company headquartered in California and focused on delivery of integrated solutions to develop and connect information technology networks. Prior to joining Cisco in 2012, Mr. Trollope served as group president at Symantec Corporation overseeing sales, marketing and product development. Mr. Trollope serves on our Audit Committee. Mr. Trollope brings to the Board extensive experience in leading high-growth enterprise technology businesses in the cloud, security and small-to-medium size business sector, as well as deep technical and product expertise.

There are no family relationships among any director nominees or executive officers of Verifone.

Committee Membership The table below summarizes membership information for each of our Board committees as of February 8, 2018:

Compensation Corporate and Leadership Governance and Audit Development Nominating Director Committee(1) Committee(2) Committee(3) Robert W. Alspaugh ✓(Chair) — ✓ Karen Austin ✓ —— Ronald Black ✓ —— Alex W. (Pete) Hart — — ✓ Robert B. Henske — ✓(Chair) ✓ Larry A. Klane — ✓ — Jonathan I. Schwartz — ✓ — Jane J. Thompson — ✓✓(Chair) Rowan Trollope ✓ —— ✓ = Member (1) In fiscal year 2017, the members of the Audit Committee were Robert W. Alspaugh (chair), Karen Austin, Robert B. Henske, Jonathan I. Schwartz and Rowan Trollope. (2) In fiscal year 2017, the members of the Compensation and Leadership Development Committee were Robert B. Henske (chair), Jonathan I. Schwartz and Jane J. Thompson.

16 2018 Proxy Statement (3) In fiscal year 2017, the members of the Corporate Governance and Nominating Committee were Jane J. Thompson (chair), Robert W. Alspaugh, Karen Austin, Alex W. (Pete) Hart and Eitan Raff. Eitan Raff resigned as a member of our Board and Corporate Governance and Nominating Committee effective December 19, 2017.

Audit Committee Financial Expert Our Board has determined that each of Robert W. Alspaugh, Robert B. Henske and Larry A. Klane is qualified as an Audit Committee financial expert within the meaning of SEC regulations. In making this determination, our Board considered the following qualifications: (a) understanding of United States generally accepted accounting principles (“GAAP”) and financial statements; (b) ability to assess the general application of GAAP to accounting for estimates, accruals and reserves; (c) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be raised by our financial statements, or experience actively supervising persons engaged in these activities; (d) understanding of internal control over financial reporting; and (e) understanding of Audit Committee functions.

Director Compensation Our Corporate Governance and Nominating Committee regularly reviews the compensation of our non-employee directors.

Each non-employee director was entitled to receive an annual cash retainer for service on our Board and Board committees during fiscal 2017 as follows:

Annual cash retainer $ 70,000 Chair of the Board cash retainer(1) $100,000 Annual committee chair cash retainers(2): Audit Committee $ 20,000 Compensation and Leadership Development Committee $ 10,000 Corporate Governance and Nominating Committee $ 10,000 Annual committee member cash retainers: Audit Committee $ 14,000 Compensation and Leadership Development Committee $ 10,000 Corporate Governance and Nominating Committee $ 8,000 (1) The Chair of the Board cash retainer is in addition to the annual cash retainer. (2) The annual committee chair cash retainers are in addition to the committee member cash retainers.

If our Board and/or a standing Board committee requires a greater than typical number of meetings in a given year, our non-employee directors will be compensated an additional $2,000 per meeting. For this purpose, a “greater than typical number of meetings” is defined as greater than ten meetings in a given year for both our Board and our Audit Committee or greater than eight meetings in a given year for both our Compensation and Leadership Development Committee and our Corporate Governance and Nominating Committee. From time to time, our Board may establish non-standing, limited purpose committees. Retainer and meeting fees for these committees are determined on a case by case basis.

In addition, each non-employee director is entitled to receive an annual equity award in the form of an RSU award for shares of our common stock with a target value of $165,000, with such awards granted following the election of directors at each annual meeting. The grant date of these equity awards is the first trading day in the month following our annual meeting of stockholders. The number of shares of our common stock subject to the RSU award is determined based on the 60-calendar-day average closing price of shares of our common stock as of the date of grant, in each case rounded up to the nearest whole share. The annual equity awards vest in full on the first anniversary of the grant date.

2018 Proxy Statement 17 Our Board has also adopted the VeriFone Systems, Inc. Director Deferred Compensation Plan to permit our non-employee directors to convert all or a portion (in 25% increments) of their annual cash retainer and committee cash retainers into fully vested deferred stock units (“DSUs”). For each such payment of fully vested DSUs, the number of stock units credited to an electing director is determined by dividing the product of the applicable percentage of the cash retainer payment elected to be converted and the applicable cash retainer payment by the closing price of shares of our common stock on the last trading day prior to the date the cash retainer payment would otherwise have been paid. The plan also permits our non-employee directors to defer all or a portion (in 25% increments) of their annual grant of RSU awards, subject to satisfaction of any applicable vesting conditions. Amounts under the plan are generally payable between the second and tenth anniversaries of grant for the deferred amounts (or earlier for death, disability or separation from service) based on the participating director’s deferral election.

The following table sets forth a summary of the compensation paid to and earned by our non-employee directors for their service in fiscal 2017:

Fiscal 2017 Director Compensation Table

Option Stock All Other Name Cash Fees Awards Awards(1),(2),(3) Compensation Total Robert W. Alspaugh $112,000 $ — $157,209 $ — $269,209 Karen Austin(4) $ — $ — $249,857 $ — $249,857 Ronald Black(5) $ — $ — $ — $ — $ — Alex W. (Pete) Hart $180,500 $ — $157,209 $ — $337,709 Robert B. Henske $104,000 $ — $157,209 $ — $261,209 Eitan Raff(6) $ 78,000 $ — $157,209 $ — $235,209 Larry A. Klane(7) $ — $ — $ — $ — $ — Jonathan I. Schwartz $ 94,000 $ — $157,209 $ — $251,209 Jane J. Thompson $ 95,500 $ — $157,209 $ — $252,709 Rowan Trollope(8) $ 38,387 $ — $ — $ — $ 38,387 (1) During fiscal 2017, each non-employee director who was a director after the close of our Annual Meeting of Stockholders on March 23, 2017 was granted an RSU award that could be settled for 8,484 shares of our common stock. Amounts shown in these columns reflect the aggregate fair value of each award as of the grant date of such award computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718 and do not reflect whether the recipient has actually realized a financial benefit from the awards. Pursuant to SEC rules, the amounts reported exclude the impact of estimated forfeitures related to service-based vesting conditions. For information on the assumptions used for the calculation of the grant date fair value of these awards, see Note 4, Employee Benefit Plans, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended October 31, 2017. (2) As of October 31, 2017, the aggregate number of shares of our common stock subject to outstanding stock options held by each of our non-employee directors was as follows: Mr. Alspaugh, 29,000; Ms. Austin, 11,000; Dr. Black, 0; Mr. Hart, 29,000; Mr. Henske, 29,000; Mr. Raff, 29,000; Mr. Klane, 0; Mr. Schwartz, 11,000; Ms. Thompson, 12,500; and Mr. Trollope, 0. (3) As of October 31, 2017, the aggregate number of shares of our common stock for which outstanding RSU awards held by each of our non-employee directors could be settled upon vesting was as follows: Mr. Alspaugh, 22,040; Ms. Austin, 22,580; Dr. Black, 0; Mr. Hart, 8,484; Mr. Henske, 20,540; Mr. Raff, 8,484; Mr. Klane, 0; Mr. Schwartz, 8,484; Ms. Thompson, 15,040; and Mr. Trollope, 0. (4) The amount reported in the “Stock Awards” column reflects annual RSU awards of $157,209 and all of her cash retainer of $92,648 converted to stock units pursuant to the VeriFone Systems, Inc. Director Deferred Compensation Plan. (5) Dr. Black joined as a member of our Board, effective December 20, 2017. (6) Mr. Raff resigned as a member of our Board and the Corporate Governance and Nominating Committee, effective December 19, 2017. (7) Mr. Klane joined as a member of our Board, effective December 20, 2017. (8) Mr. Trollope joined as a member of our Board, effective May 18, 2017.

18 2018 Proxy Statement EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program and discusses the compensation for our fiscal 2017 named executive officers (our “NEOs”). Our fiscal 2017 NEOs are: • Paul Galant, our Chief Executive Officer (our “CEO”); • Marc Rothman, our Executive Vice President and Chief Financial Officer (our “CFO”); • Vin D’Agostino, our Executive Vice President, Chief Strategy Officer; • Albert Liu, our former Executive Vice President, Corporate Development and General Counsel; and • Glen Robson, our Executive Vice President, Global Head of Solutions

Overview In this CD&A, we begin by describing our ongoing interaction with our stockholders about our executive compensation program, and the many enhancements we have made in response to their feedback over the past several years. At our most recent Annual Meeting of Stockholders in March 2017, approximately 92% of the votes cast on our proposal with respect to the compensation of our named executive officers were voted in favor of the proposal. We also provide highlights of our business performance in 2017, which serve as critical context for the compensation decisions made under our executive compensation program. Second, we review the structure of our executive compensation program and our philosophy of aligning pay with performance, supported by recent compensation outcomes demonstrating how strongly our program aligns realized pay with performance. Third, we describe and analyze the compensation decisions for our NEOs for fiscal 2017. Finally, we provide supplementary information on several aspects of our executive compensation program.

Stockholder Advisory Vote on Executive Compensation and Stockholder Engagement At our 2017 Annual Meeting of Stockholders, we conducted a non-binding stockholder advisory vote on the fiscal 2016 compensation of the named executive officers (commonly known as a “Say-on-Pay” vote). Approximately 92% of the votes cast on the proposal were voted in favor of our named executive officer compensation.

As part of our ongoing stockholder engagement program, we reached out to stockholders representing over 50% of our outstanding shares of common stock to obtain feedback on our executive compensation program, policies and practices to assist our Board in better understanding our stockholders’ views and determining whether changes to our executive compensation program were warranted. Members of management, including our CEO and CFO, investor relations, legal and human resources, participated in in-person and telephonic discussions with stockholders in the spring and fall of 2017. The feedback from these discussions was collected and communicated to our Board and the Compensation and Leadership Development Committee (the “Committee”).

Based in part on the feedback from our stockholders over the last three years, our Board and the Committee have taken the following actions described below:

WHAT WE HEARD HOW WE HAVE RESPONDED Retain focus on alignment of pay with • Long-term performance-based equity awards generally performance and long-term continue to comprise approximately 50% of each NEO’s stockholder interests target total equity award value. In fiscal 2015, 2016 and 2017, as well as our most recent awards granted for fiscal 2018, we have maintained this mix when granting equity awards to our NEOs.

Too much discretion in short-term • Beginning in fiscal 2016, we amended our short-term (annual) incentive plan incentive plan to eliminate the potential for the exercise of subjective upwards discretion in the form of qualitative adjustments of up to 20% of incentive award payouts.

2018 Proxy Statement 19 WHAT WE HEARD HOW WE HAVE RESPONDED • Beginning in fiscal 2017, we amended our short-term incentive plan to replace the individual performance portion of the plan with objective, quantitative corporate strategic goals that are established at the beginning of each fiscal year. • The short-term incentive plan no longer includes any discretionary components.

Cap “relative TSR” performance-based • Beginning in fiscal 2017, we placed a cap on the payout of restricted stock unit awards in the our performance-based restricted stock unit awards (which event of negative TSR performance are earned based on relative TSR) at the target performance level, in the event of negative absolute TSR performance over the three-year performance period. The Compensation Committee believes that in instances where we have a negative TSR, our executives should still be rewarded for superior relative TSR performance, but that it is appropriate that the payout be limited.

Link long-term performance-based • Our stockholders had a variety of opinions about metrics for equity awards to additional objective our performance-based restricted stock unit (“P-RSU”) financial metrics awards, with some favoring the current total stockholder return (“TSR”) metric and others favoring the use of the current TSR metric in combination with additional objective financial metrics. • Our Board weighed the advantages and disadvantages of increasing the number of metrics to be used in our P-RSU awards. After significant deliberation, our Board determined to retain relative TSR as the sole metric for our fiscal 2017 and 2018 P-RSU awards, deciding that a continued focus on TSR is appropriate given our current financial position and industry fundamentals. In reaching this decision, our Board noted that a significant number of stockholders supported the alignment between stockholder returns and executive compensation created by P-RSU awards focused entirely on TSR performance. In addition, our Board also noted that the stockholders who requested adding additional objective financial metrics to the awards largely supported the current relative TSR metric. Finally, our Board determined that the use of objective financial metrics in our short-term incentive plan provided appropriate emphasis on other important financial objectives. • Beginning with the P-RSU awards granted in fiscal 2018, our Board determined to use the S&P MidCap 400 Index, a broad- based market index whose components more closely aligned with our market capitalization, in lieu of the S&P North American Technology Index as the relative measure against which to compare our TSR performance. Our Board made this change in response to concerns that the S&P North American Technology Index was sector-focused and included companies with market capitalizations significantly larger than Verifone.

Cap on NEO cash and equity • Beginning in fiscal 2016, we adopted a limit, or “cap,” on the compensation maximum payout of any short-term incentive award of 200% of an executive officer’s target short-term incentive compensation opportunity.

20 2018 Proxy Statement WHAT WE HEARD HOW WE HAVE RESPONDED • Beginning in fiscal 2016, we set a maximum payout level for the P-RSU awards at 150% of the target performance level. We also imposed a limit, or “cap,” on the dollar amount that may be paid out for such P-RSU awards equal to four times the grant date fair value of any such award.

NEO compensation based on grant • Our executive compensation program closely aligns realized date values was perceived as too large compensation and performance: in relation to performance • Over 80% of the target total direct compensation opportunities of our NEOs is variable pay that is “at risk.” • The target performance levels for our short-term incentive awards are set on the basis of challenging but realizable goals with minimum thresholds of achievement required for any incentive award payout. • Approximately 50% of the target total equity award value of the long-term incentive compensation opportunities of our NEOs is delivered in the form of “Relative-TSR” performance-based P-RSU awards which are earned on the basis of our performance over a three-year period.

We value the insights gained from our discussions with our stockholders and find them to be critically important as the Committee considers and adopts policies affecting our executive compensation program. Our Board and the Committee will continue to consider the outcome of future Say-on-Pay votes, as well as feedback received through our ongoing stockholder engagement activities, to understand their views on our executive compensation program, policies and practices when reviewing our executive compensation program and making compensation decisions for our executive officers.

We also engage with our stockholders on a regular basis on various corporate governance matters. In December 2016, as part of our continuing efforts to reflect corporate governance best practices, we adopted a “proxy access” amendment to our bylaws which will enable a stockholder (or a group of up to 20 stockholders) owning 3% or more of the Company’s outstanding common stock continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to two nominees or 20% of our Board, whichever is greater, provided that the stockholder(s) and nominee(s) satisfy the requirements set forth in our bylaws.

Consistent with the recommendation of our Board at our 2017 Annual Meeting of Stockholders regarding the frequency of future Say-on-Pay votes and the preference of our stockholders as reflected in the vote on the frequency of future Say-on-Pay votes conducted at our 2017 Annual Meeting of Stockholders (commonly known as a “Say-When-on-Pay” vote), our Board has adopted a policy providing for annual Say-on-Pay votes to approve the compensation of our named executive officers. Accordingly, the next Say-on-Pay vote will take place at our 2019 Annual Meeting of Stockholders.

Alignment of Compensation and Performance—Realized Pay Recent compensation outcomes demonstrate how our executive compensation program effectively aligns realized compensation with our financial performance. Over the last two years, realized compensation materially decreased in light of the Company’s performance. • The short-term incentive award payouts made to our NEOs and other executive officers for fiscal 2017 were paid at only 67% of their target short-term incentive compensation opportunity due to our fiscal 2017 financial performance. This follows no payments being made in 2016. • The initial P-RSU award for 200,000 shares of our common stock granted to our CEO as part of his “new-hire” equity award in fiscal 2013 resulted in no shares being earned at the completion of the three- year performance period in fiscal 2016.

2018 Proxy Statement 21 • The P-RSU awards granted to our NEOs in January 2015 resulted in no shares being earned at the completion of the three-year performance period in January 2018. • Based on our stock-price performance through October 31, 2017, no portion of the P-RSU awards granted to our NEOs in January 2016 (which have a three-year performance period ending January 2019) would have been earned assuming measurement through that date.

Fiscal 2017 Business Highlights—Executing our Long-Term Strategy The following business highlights contain critical context for our executive compensation decisions for fiscal 2017.

In fiscal 2017, we continued to make significant progress on the broad multi-year transformation of our business, which initiative was launched when Mr. Galant was appointed our CEO in October 2013. Since Mr. Galant joined us, we have shifted our business strategy from that of primarily a hardware provider of traditional electronic payment terminals to that of a payment and services provider. To this end, we intend to scale our next-generation devices and link our device footprint to our cloud infrastructure. We believe that this multi- year transformation to a payment and services provider is our most critical mission. Mr. Galant and our management team have made crucial steps toward this mission by embarking on a company-wide restructuring, overhauling our business strategy, improving our product development process and introducing several new products which began to launch at scale in fiscal 2017, expanding our services offerings, building our cloud infrastructure, improving our supply chain and recruiting key employees across our business lines. As part of this transformation, we seek to help our clients navigate current market forces such as: • acceleration away from cash to electronic payments; • proliferation of POS, iPOS and mPOS solutions; • increasing complexity of consumer payments; • increasing need for connected and secure payment services; • convergence of payments and commerce; and • growing expectations for omni-channel experiences.

Although we experienced a decline in our revenue and earnings-per-share in fiscal 2017, we continued our most comprehensive product update in over a decade, which will launch a new set of products over the upcoming year that we believe will enable us to significantly enhance the services offerings that we provide our clients. We believe that, under Mr. Galant’s leadership, our management team has made significant progress in positioning us for a critical role in the future evolution and growth of our industry and in our goal of providing growth of digital payments services.

At the same time, in response to our ongoing interaction with our stockholders in fiscal 2015, 2016 and 2017, we have enhanced our executive compensation program to ensure it is robust and rigorous and that our compensation program, as well as the amounts ultimately realized by our NEOs, is closely tied to our performance. We believe that the results of this approach in fiscal 2017 demonstrate this rigor and alignment with stockholder interests.

Mr. Galant’s and our management team’s efforts enabled Verifone to achieve the following business highlights in fiscal 2017: • Strong TSR Performance. TSR improved from a negative 48.6% for fiscal 2016 to a positive 23.3% for fiscal 2017, which was in line with the fiscal 2017 2540 Global Industry Classification Standards median TSR of 26.2% and the fiscal 2017 S&P MidCap 400 Index TSR of 23.0%. • Growth in Services Net Revenues. Services net revenues growth of $18.8 million (2.4%) compared to fiscal 2016, reaching 42% of total net revenues from 38% of total net revenues, year over year, reflecting progress executing our strategy to transform from primarily a terminal sales company to a platform services company. • Strong Cash Flow. Net cash provided by operating activities of $166 million and free cash flow of $99 million.

22 2018 Proxy Statement • New Product Launches. Continued rollout of next-generation product lines to support our transition to a payment and services provider, including launches of Engage, Carbon and mPOS solutions in new markets and segments. • Completed Strategic Divestures. As part of our strategic review of under-performing businesses, completed divestures of our petroleum media business and our controlling interest in Verifone Systems (China), Inc. Further, shortly following our fiscal year-end, we completed the divestiture of our taxi business in December 2017. • Reduced Expenses. Reduced total research and development, sales and marketing and general and administrative expenses by over $30 million, reflecting our focus on restructuring and efficiency initiatives. • Maintained Strong Liquidity Position to Support Growth. Had $131 million of cash and approximately $332 million of undrawn revolver capacity as of the end of fiscal 2017 to support our transformation. • Capital Return. Expanded the share repurchase program, which was initiated in September 2015 when our Board authorized a $200 million share repurchase program, to include an additional $100 million in shares of our common stock for a total repurchase authorization of up to $300 million. As of October 31, 2017, we have repurchased a total of $150 million shares of our common stock under this program.

Our improved TSR performance in fiscal 2017 aligned with the compensation paid to our CEO and NEOs in fiscal 2017 and was reflected in the payout of 67% of their target short-term incentive compensation opportunity to our NEO and other executives in fiscal 2017 compared to no short-term incentive compensation paid to any NEO or executive in fiscal 2016.

Please see Appendix A for a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities.

Summary of 2017 Executive Compensation Actions For fiscal 2017, the Committee took the following key compensation actions with respect to the compensation of our NEOs: • Base Salaries—Maintained fiscal 2017 base salaries at fiscal 2016 levels, with no raises since fiscal 2013 other than for Mr. D’Agostino, whose base salary was increased by $40,000 in fiscal 2016 to reflect his promotion from Senior Vice President to Executive Vice President and his expanded role. Base salaries for all NEOs have been maintained at the same level for fiscal 2018. • Short-Term Incentive Compensation—Mr. Galant’s target short-term cash incentive compensation opportunity for fiscal 2017 was maintained at $1,400,000. Messrs. Rothman, D’Agostino, Liu and Robson maintained their target short-term cash incentive compensation opportunities for fiscal 2017 at fiscal 2016 levels. The short-term cash incentive compensation award payouts made to our NEOs and other executive officers for fiscal 2017 were paid at 67% of their target short-term incentive compensation opportunity due to our fiscal 2017 financial performance. • Long-Term Incentive Compensation—Granted long-term incentive compensation opportunities in the form of performance-based and time-based restricted stock unit awards. The P-RSU awards are to be earned based on our total stockholder return performance compared to the total stockholder return of the S&P North American Technology Sector Index measured over a three-year performance period. The equity awards granted to Mr. Galant had a grant date fair value of $5,117,372 and the equity awards granted to our other NEOs were in amounts ranging from a grant date fair value of $818,799 to $1,637,581.

Our Pay-for-Performance Philosophy in Action Despite our management team’s focus on key strategic and financial goals and the progress described in the “Fiscal 2017 Business Highlights—Executing our Long-Term Strategy” section above, we did not meet all of the

2018 Proxy Statement 23 financial objectives for our short-term incentive compensation plan, as established by the Committee. As a result, each NEO and our entire executive leadership team earned only 67% of their target short-term cash incentive compensation awards.

As discussed under “Detailed Review of Compensation Decisions—Long-Term Incentive Compensation” below, our relative TSR performance in our fiscal 2015 P-RSU awards fell short of the threshold performance level set by the Committee. Accordingly, no portion of our fiscal 2015 P-RSU awards were paid out upon measurement in January 2018. Furthermore, although the values ultimately realized under our P-RSU awards will depend on the value of our stock price as of the end of a three-year performance period, if the fiscal 2016 P-RSU awards granted as part of the LTI in January 2016 were measured from their grant date to October 31, 2017 and paid as of October 31, 2017, no payouts would have been made under these P-RSU awards. As illustrated in the table below, the realizable compensation for our CEO over the last three fiscal years (2015-2017) is significantly less than the annual total compensation amounts reported in the Fiscal 2017 Summary Compensation Table and demonstrates an effective “pay-for-performance” relationship when we have not performed to planned expectations.

3-Year Aggregate CEO Pay ($MM) (Fiscal Years 2015 -2017)

$25.0 $22.6 Total

Performance-Based LTI Awards $20.0 Time-Based LTI Awards $9.4 STI Cash Salary $15.0 $12.6

$2.2

$10.0 $6.8

Compensation ($MM) $5.4

$5.0 $4.0 $2.7

$2.4 $2.4 $- Granted Pay Opportunity (1) Realizable Pay (2)

(1) “Granted Pay Opportunity” equals the sum of, for all of the three prior fiscal years: (i) base salary, (ii) target value of short-term cash incentive compensation opportunity, and (iii) the grant date fair-value of the long- term incentive awards granted. (2) “Realizable Pay” equals the sum of, for all of the three prior fiscal years: (i) actual base salary paid, (ii) actual short-term cash incentive compensation award earned, (iii) the realized value of long-term P-RSU awards granted in 2015, (iv) an assumed realizable value of long-term P-RSU awards granted in 2016 and 2017 based on the methodology described below, (v) the value as of their vesting date of time-based equity awards granted in fiscal 2015, 2016 and 2017 that vested prior to October 31, 2017, and (vi) an assumed realizable value for unvested time-based equity awards granted in fiscal 2015, 2016 and 2017 based on the fair market value of our common stock on October 31, 2017 of $19.08 per share. Under the terms of our P-RSU awards, no shares of our common stock are earned if our total stockholder return compared to the total stockholder return of the S&P North American Technology Sector Index, measured over a three-year performance period, is below the 25th percentile on a stack-ranked basis. We have assumed that none of the P-RSU awards granted to our CEO in fiscal year 2016 will be earned and that 93% of the P-RSU awards granted to our CEO in fiscal year 2017 will be earned based on the closing market price of our common stock

24 2018 Proxy Statement of $19.08 per share as of October 31, 2017 in light of our stock price performance as compared against the S&P North American Technology Sector Index from the respective dates these awards were granted through October 31, 2017. The values ultimately realized on these P-RSU awards will depend on the actual market share price of our common stock as of the end of the three-year performance periods for these awards.

Our Executive Compensation Program Objectives We believe that highly talented, dedicated, and results-oriented management is critical to our growth and long-term success. Our executive compensation program, which is subject to the oversight of our Board and the Committee, is designed to: • Align our executive officers’ interests with long-term stockholder value creation by providing for a significant portion of management’s compensation in the form of long-term incentive awards, such as stock options, RSUs, and other stock-based awards, with a combination of time-based and performance- based vesting schedules, the value of which depends upon the performance of our common stock; • Tie each executive officer’s compensation to our success during the most recent fiscal year, measured in large part by our financial and operational performance, using targets that are aligned with our business strategy and operational plan as approved by our Board, and any variations in stockholder value during that period; • Attract, motivate, and retain high-quality management talent in an intensely competitive market; and • Ensure that each executive officer’s compensation is at appropriate and competitive levels relative to each other and to senior executives at companies that we have identified as peer companies, or other appropriate surveyed companies, including certain of our competitors.

2018 Proxy Statement 25 Executive Compensation Elements

Clawback and Forfeiture Element Description Considerations and Rationale Provisions Base Salary • Fixed annual cash amount • Provides a competitive fixed rate of — base pay recognizing different levels • Paid periodically throughout the year of responsibility and performance Short-Term Incentive • Variable annual performance-based cash incentive • Incentivizes achievement of ✓ Compensation (“SIP”) awards important short-term corporate and financial objectives as reflected in • The maximum level of payout is 200% of the target our annual operating plan short-term incentive compensation opportunity Long-Term Incentive Compensation (“LTI”) Time-based • Restricted stock unit awards with time-based vesting • Realizable compensation based ✓ upon the intrinsic value of our common stock which vests over time. Retains executives through vesting over a multi-year period

• Ties a substantial amount of an executive’s overall compensation to our long-term performance Performance- • Performance-based restricted stock unit (“P-RSU”) • Motivates executives and rewards ✓ based awards based on achievement of stockholder return the achievement of superior TSR compared to the S&P North American Technology performance over a three-year per- Sector Index (or, beginning with our January 2018 formance period awards, the S&P MidCap 400 Index), measured over • Ties a substantial amount of an a three-year performance period. executive’s overall target total direct • If our Company TSR falls below the 25th percentile compensation to our relative long- for the three-year performance period, then there will term stock performance be no payout on the awards. The maximum payout • Intend to have performance-based level for the P-RSU awards is 150% of the target awards account for approximately level for achievement of 75th percentile or greater 50% of LTI compensation performance for the three-year performance period.

• If our absolute Company TSR is negative for the three-year performance period, the payout for the P-RSU awards is capped at the target level.

Long-Term Performance-Based Incentive Program Design 200%

150% Positive TSR

100% Negative TSR Payout

50%

0% 0% 25% 50% 75% 100% Relative TSR Performance

26 2018 Proxy Statement The foregoing elements combine to promote the compensation objectives that we have described above. The Committee believes that a balanced mix of both short-term cash incentives and long-term equity incentives are appropriate to implement our overall compensation strategy. The percentage that these elements represent of compensation granted in fiscal 2017 to our CEO and, on average, our other NEOs is set forth below:

2017 NEO Compensation Mix

CEO Other NEOs (Average)

11% Base 20% 36% Time-based Base 31% Time-based RSUs RSUs

19% Target SIP 20% Target 29% Performance- SIP based RSUs 34% Performance- based RSUs

Variable Pay - At Risk, 53% Variable Pay - At Risk, 49%

The Committee considers long-term equity awards as the most effective component of our executive compensation program for attracting and retaining executive talent, and incentivizing long-term performance that aligns with the interests of our stockholders. Accordingly, in setting executive compensation, the Committee has generally allocated executive compensation opportunities more heavily toward long-term equity awards. Moreover, in any particular performance period, assuming strong company and/or individual performance, the Committee may use equity awards for retention purposes or to incentivize performance in cases where the nature of an executive’s future performance goals merits a higher award commensurate with higher target achievement for the performance period.

The Committee evaluates base salaries and short-term and long-term incentive awards as tools to provide the appropriate incentives to meet our compensation objectives both individually and in the aggregate for our NEOs. The Committee is also cognizant of the importance of investing in executive talent to help achieve our corporate strategies and goals, particularly during times of corporate transformation. We believe the most important indicator of whether our compensation objectives are being met is whether we have structured our compensation elements to incentivize delivery of superior performance, particularly with respect to our financial performance and strategic initiatives, as well as long-term growth and profitability, and overall stockholder return.

Executive Compensation Policies and Practices We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The Committee evaluates our executive compensation program on a regular basis to ensure that it is consistent with our short-term and long-term goals. The following policies and practices were in effect during fiscal 2017: • Direct Communication with Board of Directors. We provide a direct line of communication for our stockholders with our Board, as described under “Director Independence and Corporate Governance— Communications with Directors” above. • Independent Compensation and Leadership Development Committee. The Committee is comprised solely of independent directors. • Independent Compensation and Leadership Development Committee Advisors. The Committee engaged its own compensation consultant to assist with its fiscal 2017 compensation responsibilities. This consultant performed no consulting or other services for us during fiscal 2017.

2018 Proxy Statement 27 • Annual Executive Compensation Review. The Committee conducts an annual review and approval of our compensation strategy, including a review of our compensation peer group used for comparative purposes. • Executive Compensation Policies and Practices. Our compensation philosophy and related corporate governance policies and practices are complemented by several specific compensation practices that are designed to align our executive compensation with long-term stockholder interests, including the following: • Annual Stockholder Advisory Vote to Approve Named Executive Officer Compensation. We provide our stockholders with an annual non-binding advisory vote to approve the compensation of our NEOs. • No Material Perquisites. We do not provide material perquisites to our NEOs. • No Excise Tax “Gross-ups.” We do not provide excise tax “gross-up” or other tax reimbursement payments in connection with executive severance or change in control payments and benefits. • “Double-Trigger” Change-of-Control Arrangements. All change-of-control payments and benefits are based on a “double-trigger” arrangement (that is, they require both a change-of-control of Verifone plus a qualifying termination of employment before payments and benefits are paid). • Stock Ownership Guidelines. We require our CEO, CFO and other executive officers to own a minimum number of shares of our common stock valued at five, four or three times their annual base salary, respectively. These stock ownership guidelines are further described in “Executive Stock Ownership Guidelines” below. • Compensation Recovery Policy. We maintain a compensation recovery policy that provides for the recoupment of annual cash and equity incentive compensation from our NEOs in the event of a financial restatement, as further described in “Adjustment or Recovery of Awards; Compensation Recovery (Clawback) Policy” below. • Hedging and Pledging Prohibited. We prohibit our employees, including our NEOs, and our non-employee directors from hedging or pledging our securities. • No Stock Option Repricings. We do not reprice outstanding stock options (where the exercise price is below the then-current market price of our common stock) without stockholder approval. • Increased Alignment on Short-term Incentive Awards. Short-term incentive awards are earned based 75% on corporate financial performance measures (revenue, non-GAAP EPS and free cash flow for fiscal 2017) and 25% on strategic objectives (services net revenue and new product net revenue for fiscal 2017), without the discretion to increase earned payout amounts. • Limit on Short-term Incentive Awards. We maintain a limit, or “cap,” on the maximum payout of any short-term incentive award of 200% of an executive officer’s target short-term incentive compensation opportunity. • Long-term Incentive Compensation. We maintain a policy requiring that generally half of the value of the long-term incentive compensation granted to our executive officers must be performance-based. • Performance-based Equity Awards. Consistent with the foregoing policy in fiscal 2017, we granted P-RSU awards providing that such awards will be earned based on our total stockholder return (“TSR”) compared to the TSR of the S&P North American Technology Sector Index, measured over a three-year performance period. These P-RSU awards also provide for threshold, target, and maximum performance levels which will result in at-target, below-target, and above- target earn-outs based on our actual TSR performance for the performance period. If our Company TSR falls below the 25th percentile for the three-year measurement period, then there would be no payout on the P-RSU awards. For example, if our fiscal 2016 P-RSU awards had been granted with a two-year measurement period ending in January 2018, there would have been no payout on those awards. Beginning with the awards granted in fiscal 2018, the Board determined to use a broad- based market index whose components more closely aligned with the Company’s market capitalization, the S&P MidCap 400 Index, in lieu of the S&P North American Technology Index which was sector-focused and included companies with market capitalizations significantly larger than Verifone.

28 2018 Proxy Statement • Payout Limits for Performance-based Equity Awards. The maximum payout level for the P-RSU awards is 150% of target. We maintain a limit, or “cap,” on the dollar amount that may be paid out for such P-RSU awards equal to four times the grant date fair value of any such award. • Additional Cap on Performance-based Equity Awards. As discussed above, no incremental payouts are made under our P-RSU awards above target unless we achieve a positive absolute TSR. • Peer group selection methodology. We use a formula-based approach, based on objective, quantitative criteria, for selecting companies for our compensation peer group that places us at approximately the average of the range of market capitalization and revenue of our peer group companies.

Role of Compensation and Leadership Development Committee in Determination of Executive Compensation The Committee reviews our executive compensation program, policies and practices annually. The Committee analyzes all existing elements of compensation (including base salary, short-term cash incentive compensation awards and long-term incentive compensation) for each executive officer. The Committee evaluates each component of our compensation program to provide the appropriate incentives to meet our compensation objectives both individually and in the aggregate.

In determining the compensation of each executive officer, including each NEO, the Committee considers a number of factors and data points, including the following: • The contribution, expertise and experience of the executive officer; • The scope and importance of such executive officer’s responsibilities; • Competitive market data, based on peer group data and other analyses prepared by the Committee’s compensation consultant, as described below; • Whether the short-term and long-term elements of the compensation package, in absolute as well as relative terms, assure that appropriate recognition, incentives and retention value are maintained; • Our stock price performance over a multi-year period compared against relevant market indices; • Our financial performance during the fiscal year as measured against projections of our financial performance approved by our Board at the beginning of the fiscal year, including projections in respect of non-GAAP net revenues, non-GAAP EPS and free cash flow; • The compensation package received by the executive officer in prior fiscal years; • The compensation package of the individual executive officer as compared with each other as well as our other officers; and • With respect to our executive officers other than our CEO, the recommendation of our CEO based on his evaluation of the individual’s performance, as described below.

The Committee’s goal in its deliberations is to award compensation that is reasonable in relation to the objectives of our executive compensation program when all elements of potential compensation are considered. The Committee uses the compensation data and market trends described below as an important factor in setting the compensation of our executive officers. This data is one of a number of factors in the Committee’s decisions regarding compensation and pay practices, and it generally uses such data and trends as a reference point rather than as a strict benchmarking tool in making decisions as to whether the contributions and responsibilities of each NEO are properly reflected in his or her compensation. Where an executive officer’s role comprises more than one function or area of responsibility, the Committee consults with its compensation consultant to evaluate additional data and recommendations in adjusting such executive officer’s compensation to reflect his or her role.

As part of its annual process to set executive compensation, the Committee considers competitive compensation levels for each compensation element based on peer group companies and competitive market data. Assessments are made on an executive-by-executive basis, with consideration of the size and complexity of each executive officer’s business unit or function, as well as their individual roles and responsibilities. The

2018 Proxy Statement 29 Committee places substantial weight on whether the compensation will incentivize superior performance as well as on the overall competitiveness and retention value of an executive officer’s compensation. With respect to executive officers other than our CEO, the Committee also places substantial weight on performance reviews measuring objective standards of such executive officers that are made by our CEO. The Committee evaluates the competitiveness within our industry for executive talent of the caliber that we desire and also gives consideration to organizational factors that may impact retention of our executive officers. Several of our recent management changes have included the addition of executive officers with extensive executive leadership experience and a level of expertise at organizations that are larger in scale and complexity than ours and our peer group companies. The Committee takes into consideration the value to Verifone of such individual’s experience and level of expertise in setting compensation.

Our current arrangements with our NEOs relate in part to terms that we negotiated with each NEO when he was hired. The pay levels and awards reflected in the employment arrangements for these executive officers were a result of extensive negotiations with each of them, taking into account the totality of the circumstances and the competitiveness in our industry for executive talent. Negotiated terms at the time of hire are intended to be specific only to the new hire compensation for the executive officer. Ongoing compensation will be determined based on performance and the principles of our executive compensation program. On an ongoing basis, the Committee would continue to give significant weight to an executive’s experience, background and demonstrated leadership in evaluating whether an executive’s total compensation is competitive and sufficient to retain an executive. For more information on the compensation terms provided to our NEOs, see the discussion under “Employment Agreements and Offer Letters” below.

Role of Compensation Consultant The Committee retains and consults with a compensation consultant on our overall compensation strategy and the competitiveness of our executive compensation program, and considers the input of the compensation consultant in making compensation decisions. The Committee also considers information from its compensation consultant regarding the compensation levels of companies within our industry and other industries that compete for the same talent. We also subscribe to third-party compensation survey and advisory services that allow us and the Committee to access reports and compensation survey data for comparative purposes. In determining compensation policies and practices for our NEOs, the Committee also considers the executive compensation policies periodically published by the major proxy advisory firms.

In recent years, the Committee has retained Compensia, a national compensation consulting firm, to provide relevant competitive market data and compensation advisory services in connection with its review and determination of compensation for our executive officers, including our NEOs. During fiscal 2017, neither Compensia nor any of its affiliates provided any services to us other than the services provided to the Committee. During fiscal 2017, the Committee conducted an independence evaluation of Compensia pursuant to SEC rules and the NYSE listing standards, including a consideration of any potential conflict of interests, prior to its engagement of Compensia and concluded that Compensia was independent. Compensia reports directly to the Committee and may be terminated or replaced at any time at the Committee’s sole discretion.

Competitive Market Data The Committee considers compensation-related market and peer group data, as well as additional survey data in making executive compensation decisions. Our compensation peer group consists of companies that were selected using an objective, “formula-based” approach which was developed as a direct result of stockholder feedback. This formula-based approach identifies companies with the following characteristics: • Principal business generally in high-technology; • Comparable in market capitalization (using companies with four-tenths to four times our market capitalization); • Comparable in revenues (using companies with one-half to two times our annual revenues); • Having a similar relationship between the above two metrics (using companies with market capitalizations between one and four times their annual revenues); and • Having annual revenue growth exceeding 5%.

30 2018 Proxy Statement Our formula-based approach also seeks to develop a compensation peer group that places us at approximately the average of the range of market capitalization and revenue of our peer companies. Although we are using a consistent policy approach, there was a significant amount of turnover in our peer companies due to the decline in our market capitalization in 2016 when the peer group was established. The companies in our compensation peer group were updated to reflect this reduction in our market capitalization in order to align ourselves more closely to the compensation peer group from a market capitalization perspective. Due to the formulaic nature of our approach, changes in our market capitalization or revenues will impact the composition of our compensation peer group; however, it is our goal to reduce the number of changes year-over-year absent a significant change in market capitalization or revenues.

Verifone’s position as compared to the companies in our fiscal 2017 compensation peer group based on market capitalization and revenues is set forth below:

Verifone Vs. Peer Group Market Capitalization*

Verifone 51st Percentile

Revenue**

Verifone 52nd Percentile

*As of 8/31/16 (30-day avg.) **Based upon the prior four fiscal quarters ended on or prior to 8/31/16

The following companies comprised the compensation peer group for fiscal 2017 based on the application of the formula-based approach:

Belden Inc. Benchmark Electronics, Inc. Blackhawk Network Holdings, Inc. Cardtronics, Inc. Ciena Corporation CoreLogic, Inc. Cree, Inc. Cypress Semiconductor Corporation EchoStar Corporation Euronet Worldwide, Inc. Fitbit, Inc. Itron, Inc. NeuStar, Inc. OSI Systems, Inc. Plexus Corp. ScanSource, Inc. Synaptics, Inc. TTM Technologies, Inc. Viasat, Inc. Vishay Intertechnology, Inc. Zebra Technologies Corporation

Where additional market data is needed for the evaluation of compensation for our executive officers, including when there is insufficient peer company information available, the Committee uses compensation survey data for companies generally with the same characteristics noted above, and that are likely to compete with us for executive talent. For fiscal 2017, additional competitive market data was provided from the Radford Global Technology Compensation Survey of companies with annual revenues in the range of $1.0 billion to $3.0 billion.

The competitive data reviewed by the Committee includes analyses of base salary, total cash compensation, long-term incentive compensation value and total direct compensation of our peer companies and additional competitive market data prepared by its compensation consultant. In preparing for its annual review of executive compensation, the Committee seeks advice from its compensation consultant with respect to the individual elements of executive compensation, as well as the competitiveness of our executive compensation program compared to the compensation peer group and other competitive market data, and taking into account any changes to the competitive environment for executive talent in our markets. In evaluating executive compensation and our executive compensation program, the Committee takes into account our one-year and three-year financial performance based on parameters such as net revenues, operating income trend, net income trend, market capitalization growth and TSR, compared to the compensation peer group and other competitive market data.

2018 Proxy Statement 31 Role of CEO in Determining Executive Compensation for NEOs Our CEO completes an annual performance evaluation with each of our executive officers, including each of the other NEOs, and provides recommendations to the Committee with respect to the determination of their compensation; however, our CEO does not make a recommendation as to his own compensation. While the Committee uses this information and values our CEO’s recommendations, it ultimately exercises its own judgment in setting each NEO’s compensation. Our CEO was not present at any Committee discussions regarding his own compensation.

Employment Arrangements with the NEOs We may enter into written agreements with one or more of our executive officers related to specific employment or compensation terms. The Committee makes the determination as to the terms and conditions of our agreements with our executive officers. In general, the Committee considers whether an agreement is necessary to obtain a measure of assurance as to the executive officer’s continued employment in light of prevailing market competition for the particular position held by the individual and the importance of the particular position to our operations and strategic plan, or if the Committee determines that an employment agreement is necessary and appropriate to attract, motivate, and retain executive talent in light of market conditions, the prior experience of the individual, or our practices with respect to other similarly situated employees.

Employment agreements and offer letters for our NEOs are summarized in the section “Employment Agreements and Offer Letters” below.

Fiscal 2017 Executive Compensation Decisions Detailed Review of Compensation Decisions Base Salary The Committee reviewed the base salary for our NEOs at the beginning of fiscal 2017 and decided to maintain the same annual base salary for fiscal 2017 as for fiscal 2016 for Messrs. Galant, Rothman, Liu, Robson and D’Agostino. The base salaries of Messrs. Galant, Rothman and Liu have remained the same since at least fiscal 2013. The base salary of Mr. Robson has remained the same since he was appointed as our Executive Vice President, Global Head of Solutions in fiscal 2015. The following table sets forth the annual base salaries for fiscal 2017 for our NEOs:

NEOs Fiscal 2017 Paul Galant $800,000 Marc Rothman $450,000 Vin D’Agostino $400,000 Albert Liu $400,000 Glen Robson $450,000

Base salaries have been maintained at the same level for fiscal 2018.

Short-Term Cash Incentive Compensation The Committee uses the short-term incentive compensation plan to incentivize achievement of certain short- term corporate objectives as reflected in our annual operating plan. The performance measures and related target levels are established at the beginning of each fiscal year based on our annual operating plan as approved by our Board at that time and at or above our announced guidance. The fiscal 2017 corporate financial and strategic performance objectives and our actual achievement versus such objectives are discussed in further detail under “Fiscal 2017 Short-Term Cash Incentive Compensation Summary” and “Fiscal 2017 Short-Term Incentive Compensation Results” below.

In selecting the performance measures and related target levels for our short-term incentive compensation opportunities, the Committee balances the consideration of the likelihood of achieving such performance

32 2018 Proxy Statement objectives with the effectiveness of such objectives in incentivizing our NEOs’ performance, consistent with similar considerations when management prepares our annual operating plan. The Committee aims to set company-wide financial performance target levels that are expected to be attainable with meaningful effort. On a year-over-year basis, we typically plan for a certain growth rate in each of the financial performance measures when setting the related target levels, after taking into account growth opportunities, strategic initiatives and market position as well as any countervailing considerations. Therefore, in general, unless there are unusual or unexpected factors affecting our business in general, our key markets or a key business unit or region, it is probable, though not certain, that the target levels can be achieved with meaningful effort. It is important to the Committee that the achievement of these target levels is subject to a certain level of risk, including the risk that there will be no payout as a result of failure to meet the threshold requirement.

For fiscal 2017, our NEOs’ short-term incentive compensation opportunity consisted of a target short-term cash incentive compensation opportunity. Consistent with our compensation philosophy, 100% of that opportunity was to be determined based on pre-established company-wide performance measures, consisting of corporate financial performance measures and corporate strategic performance measures. In fiscal 2017, we eliminated the short-term incentive compensation opportunity based on achievement of individual performance objectives based on each NEO’s individual scorecard metrics. Each NEO’s short-term cash incentive compensation award was based on the actual percentage achievement for each financial performance measure and strategic performance measure, subject to the calculation methodology and adjustment described below. The maximum short-term cash incentive compensation award attainable for each individual based on the company-wide performance measures is further capped at 200% of the individual’s short-term cash incentive compensation opportunity.

Fiscal 2017 Target Cash Incentive Compensation Opportunity The Committee reviewed the target cash incentive compensation opportunity for our NEOs at the beginning of fiscal 2017 and decided to maintain the same target cash incentive compensation opportunities for fiscal 2017 as for fiscal 2016 for Messrs. Galant, Rothman, Liu, Robson and D’Agostino. The following table sets forth the target cash incentive compensation opportunities, as well as the target cash incentive compensation opportunities as a percentage of base salary, for fiscal 2017 for our NEOs:

% of Base NEOs Fiscal 2017 Salary Paul Galant $1,400,000 175% Marc Rothman $ 450,000 100% Vin D’Agostino $ 400,000 100% Albert Liu $ 400,000 100% Glen Robson $ 450,000 100%

Fiscal 2017 Performance Measures Company Financial Performance Measures The Committee views our overall financial performance as the most important factor in determining an NEO’s short-term cash incentive compensation award. For fiscal 2017, the Committee selected non-GAAP net revenues, non-GAAP earnings-per-share (“EPS”) and free cash flow as the Company financial performance measures, and non-GAAP services net revenue and non-GAAP new product net revenue as the Company strategic performance measures, which directly supported our fiscal 2017 business priorities. The Committee also determined that we would need to achieve at least 80% of the pre-established target level for both the non-GAAP net revenues and non-GAAP EPS performance measures (before applying the decelerator/accelerator factor described below) for there to be an award payout. Failure to meet this threshold performance level for either measure would result in no award payout. In addition, the maximum payout under each of the Company strategic performance measures was capped at 150% of the pre-established target performance level. The maximum payout under each of the Company financial performance measures was not capped; however, the maximum total short-term cash incentive compensation award attainable for each individual was capped at 200% of the individual’s short-term cash incentive compensation opportunity. The relative weighting among these five performance measures for fiscal 2017 reflected a focus on revenues to emphasize the importance of revenue

2018 Proxy Statement 33 attainment and growth to the value of Verifone. All fiscal 2017 financial measure target levels were set at or above our announced guidance near the beginning of the fiscal year.

1. Non-GAAP net revenues (weighted 40%) We consider growth in revenues to be an essential component of our long-term success and viability. We use non-GAAP net revenues in addition to our GAAP revenues to evaluate our overall performance. For fiscal 2017, non-GAAP net revenues were calculated by adding back to our GAAP net revenues the fair value decrease (step- down) in deferred services net revenues at acquisition from acquired entities. We refer to this measure as “non-GAAP net revenues” in reporting our financial results in our current reports on Form 8-K. Please see Appendix A for a reconciliation of our non-GAAP net revenues to our GAAP net revenues for fiscal 2017.

For purposes of calculating the performance achievement for our non-GAAP net revenue, the Committee applied a decelerator/accelerator factor that provided for every percentage point that we underachieved or overachieved versus the pre-established target level for fiscal 2017, the deemed achievement percentage for this measure would be reduced or increased by five percentage points. For example, if we achieved 99% of the target level for non-GAAP net revenues, for the purposes of the short-term cash incentive compensation plan we would be deemed to have achieved 95% of this measure. Similarly, if we achieved 101% of the target level of this measure, we would be deemed to have achieved 105% of this measure. If the non-GAAP net revenues performance measure does not achieve at least 80% of the pre-established target level (before applying the decelerator/accelerator factor), no short-term cash incentive compensation award will be paid.

2. Non-GAAP EPS (weighted 25%) We consider growth in non-GAAP EPS to be an indicator of our ability to generate returns on our operations and fund future growth. We use this performance measure to evaluate our performance and compare our current results with those for prior periods, as well as with the results of other companies in our industry. This non-GAAP performance measure has also been used by investment analysts to evaluate our performance. For fiscal 2017, non-GAAP EPS was calculated by excluding the following GAAP items from GAAP net income (loss) as reported: amortization of step-down in deferred services net revenue at acquisition; amortization of purchased intangible assets; other merger, acquisition, and divestiture related expenses; restructuring charges; stock-based compensation; goodwill impairment; cost of debt refinancing; certain other charges and income that we believe may limit the comparability of our ongoing operations with prior and future periods, such as litigation settlement and loss contingency expense; certain costs incurred in connection with senior executive management changes, such as separation payments, non-compete arrangement fees, legal fees and recruiter fees; and the income tax effect of non-GAAP exclusions. For this purpose, non-GAAP diluted shares included additional shares for non-GAAP purposes in periods where we had non-GAAP net income and a GAAP net loss. We refer to this measure as “non-GAAP net income per diluted share” in reporting our financial results in our current reports on Form 8-K. Please see Appendix A for a reconciliation of our non-GAAP net income (loss) to our GAAP net income (loss) and our non-GAAP EPS to GAAP EPS for fiscal 2017.

As with non-GAAP net revenues, for purposes of calculating the performance achievement for our non-GAAP EPS, the Committee applied a decelerator/accelerator factor that provided for every percentage point that we underachieved or overachieved versus the pre-established target level for fiscal 2017, the deemed achievement percentage for this measure would be reduced or increased by five percentage points. However, no payout would be made for fiscal 2017, if we did not reach at least 100% of the target level for non-GAAP EPS. For example, if we achieved 99% of the target level for non-GAAP EPS, for the purposes of the short-term cash incentive compensation plan we would be deemed to have achieved 0% of this measure. Similarly, if we achieved 101% of the target level of this measure, we would be deemed to have achieved 105% of this measure. As noted above, for the non-GAAP EPS performance measure to contribute to the payout amount of the short-term cash incentive compensation award, at least 100% of the pre-established target level (before applying the decelerator/ accelerator factor) must be achieved. In addition, if the non-GAAP EPS performance measure does not achieve at least 80% of the pre-established target level (before applying the decelerator/accelerator factor), no short-term cash incentive compensation award will be paid.

3. Free cash flow (weighted 10%) Free cash flow is a non-GAAP financial measure. We determine free cash flow as net cash provided by operating activities less capital expenditures, in each case as determined in accordance with GAAP. We believe

34 2018 Proxy Statement free cash flow is a useful measure of liquidity and an additional basis for assessing our ability to fund our activities, including the financing of acquisitions, debt service and repurchases of our common stock. Please see Appendix A for a reconciliation of our free cash flow to our GAAP net cash provided by operating activities for fiscal 2017.

4. Services net revenue (weighted 12.5%) Services net revenue is a non-GAAP financial measure. We consider growth in non-GAAP services net revenue to be an indicator of our ability to generate returns in our services business which we consider an important part of our value. We use this performance measure to evaluate our performance and compare our current results with those for prior periods, as well as with the results of other companies in our industry. This non-GAAP performance measure has also been used by investment analysts to evaluate our performance. Please see Appendix A for a reconciliation of our non-GAAP services net revenue to our GAAP services net revenue for fiscal 2017.

As with non-GAAP net revenues and non-GAAP EPS, for purposes of calculating the performance achievement for our non-GAAP services net revenue, the Committee applied a decelerator/accelerator factor that provided for every percentage point that we underachieved or overachieved versus the pre-established target level for fiscal 2017, the deemed achievement percentage for this measure would be reduced or increased by five percentage points. For example, if we achieved 99% of the target level for non-GAAP services net revenue, for the purposes of the short-term cash incentive compensation plan we would be deemed to have achieved 95% of this measure. Similarly, if we achieved 101% of the target level of this measure, we would be deemed to have achieved 105% of this measure. For the non-GAAP services net revenues performance measure to contribute to the payout amount of the short-term cash incentive compensation award, at least 80% of the pre-established target level (before applying the decelerator/accelerator factor) must be achieved. Additionally, the maximum payout under the non-GAAP services net revenues performance measure (after applying the decelerator/ accelerator factor) was capped at 150% of the pre-established target performance level.

5. New product net revenue (weighted 12.5%) New product net revenue is a non-GAAP financial measure. We consider non-GAAP new product net revenue to be an indicator of the adoption of our new solutions into the market. We use this performance measure to evaluate our performance and compare our current results with those for prior periods, as well as with the results of other companies in our industry. This non-GAAP performance measure has also been used by investment analysts to evaluate our performance. Please see Appendix A for a reconciliation of our non-GAAP new product net revenue to our GAAP systems revenue for fiscal 2017.

Similar to non-GAAP services net revenues, the maximum payout under the non-GAAP new product net revenues performance measure was capped at 150% of the pre-established target performance level.

2018 Proxy Statement 35 Fiscal 2017 Short-Term Cash Incentive Compensation Summary The following chart shows the short-term cash incentive compensation performance measures and the actual performance for each measure for fiscal 2017. The minimum potential short-term cash incentive compensation award is 0% of the pre-established target level.

Performance Measures—Fiscal 2017 Performance Levels(8)

Threshold Maximum Performance (Varying Target (150% of Percentage of Measure Target (100% of Target 2017 Actual % Actual Target Award Weighting Payouts)(2) Target Payout) Payout)(3) Performance Achievement(4) Earned(5) Financial and Corp. Performance Measures (in millions, except per share numbers and percentages)(1) 100% Financial Performance Measures Non-GAAP Net Revenues(6) 40% $1,513 $1,891 N/A $1,874 95.4% 38.2% Non-GAAP EPS(6)(7) 25% $ 1.47 $ 1.47 N/A $ 1.31 0.0% 0.0% Free Cash Flow 10% N/A $ 120 N/A $ 99 82.5% 8.3% Strategic Performance Measures Non-GAAP Services Net Revenues 12.5% $ 613 $ 766 $1,149 $ 788 114.8% 14.4% Non-GAAP New Product Net Revenues 12.5% N/A $ 76 $ 92 $ 38 49.4% 6.2% Total Percentage of Target Award Earned 67.1% (1) See Appendix A to this Proxy Statement for a reconciliation of our non-GAAP financial performance measures to our GAAP financial performance measures for fiscal 2017. (2) At least 80% of the pre-established target level must be achieved for there to be a payout under either the non-GAAP net revenues or the non-GAAP services net revenues performance measure. If the 80% threshold is met under either (both) the non-GAAP net revenues or (and) the non-GAAP services net revenues performance measure(s), there is a payout of 80% of the pre-established target level(s). At least 100% of the pre-established target level must be achieved for there to be a payout under the non-GAAP EPS performance measure. If the 100% threshold is met under the non-GAAP EPS performance measure, there is a payout of 100% of the pre-established target level. There is no threshold for payout under the Free Cash Flow and the non-GAAP new product net revenue performance measures. (3) The maximum payout under each of the Company strategic performance measures was capped at 150% of the pre-established target performance level. The maximum payout under each of the Company financial performance measures was not capped; however, the maximum short-term cash incentive compensation award attainable for each individual was capped at 200% of the individual’s short-term cash incentive compensation opportunity. (4) The “% Actual Achievement” column reflects unadjusted achievement percentages, including the actual achievement levels for non-GAAP net revenues, non-GAAP EPS and non-GAAP services net revenues after applying the accelerator/decelerator factor to each such measure. Prior to application of the decelerator/accelerator factor to each such measure, the achievement levels for these measures were as follows: non-GAAP net revenues, 99,1%; non-GAAP EPS, 89.1% (see Footnote 7 below) and non-GAAP services net revenues, 102.9%. (5) The “Percentage of Target Award Earned” column reflects the percentage of the target award earned after application of the performance measure weightings. Additionally, the achievement percentages for non-GAAP net revenues, non-GAAP EPS and non-GAAP services net revenues reflect the adjusted achievement levels after applying the accelerator/decelerator factor to each such measure. (6) A minimum threshold of 80% of the pre-established target level for both the non-GAAP net revenues and the non-GAAP EPS performance measures must be achieved for there to be any award payout. (7) In fiscal 2017, no payout was made under the Non-GAAP EPS performance measure because we failed to achieve 100% of the pre-established target level for the non-GAAP EPS performance measure. (8) Target and actual performance levels were adjusted to give effect to the impact of acquisitions and divestitures.

Fiscal 2017 Short-Term Cash Incentive Compensation Results The short-term cash incentive compensation performance measures, related target levels and actual short- term incentive awards for fiscal 2017 are summarized in the table below.

Performance Measures—Fiscal 2017 Paul Galant Marc Rothman Vin D’Agostino Albert Liu Glen Robson

% Actual Achieve- ment(1) Weight Target Award Target Award Target Award Target Award Target Award Financial and Corp. Performance Measures (in millions, except per share numbers and percentages)(1)(2) 100% Financial Performance Measures Non-GAAP Net Revenues 95.4% 40% $ 560,000 $534,240 $180,000 $171,720 $160,000 $152,640 $160,000 $152,640 $180,000 $171,720 Non-GAAP EPS 0.0% 25% $ 350,000 $ — $112,500 $ — $100,000 $ — $100,000 $ — $112,500 $ — Free Cash Flow 82.5% 10.% $ 140,000 $115,500 $ 45,000 $ 37,125 $ 40,000 $ 33,000 $ 40,000 $ 33,000 $ 45,000 $ 37,125 Strategic Performance Measures Non-GAAP Services Net Revenues 114.8% 12.5% $ 175,000 $200,889 $ 56,250 $ 64,572 $ 50,000 $ 57,397 $ 50,000 $ 57,397 $ 56,250 $ 64,572 Non-GAAP New Product Net Revenues 49.4% 12.5% $ 175,000 $ 86,461 $ 56,250 $ 27,792 $ 50,000 $ 24,704 $ 50,000 $ 24,704 $ 56,250 $ 27,792

Total 100% $1,400,000 $937,090 $450,000 $301,209 $400,000 $267,741 $400,000 $267,741 $450,000 $301,209

(1) The achievement percentages indicated above for non-GAAP net revenues, non-GAAP EPS and non-GAAP services net revenues reflect the actual achievement levels after applying the accelerator/decelerator factor to each such measure (and, with respect to the non-GAAP EPS performance measure, reflecting that no payout was made because we failed to achieve 100% of the pre-established target level for that performance measure). (2) See Appendix A to this Proxy Statement for a reconciliation of our non-GAAP financial performance measures to our GAAP financial performance measures for fiscal 2017.

36 2018 Proxy Statement Long-Term Incentive Compensation The Committee determines, on an annual basis, whether to provide a long-term incentive compensation opportunity in the form of equity awards to our executive officers, including our NEOs, subject to any pre-existing contractual obligations. The Committee believes that equity awards encourage a strong ownership stake in Verifone and align the interests of our NEOs with those of our stockholders. In addition, these equity awards are intended to serve as incentives for our NEOs to remain with us, continue performance at levels consistent with our corporate objectives and tie a substantial amount of their overall target total direct compensation to our long- term stock performance and profitability. As a result, our executive compensation program generally has been weighted more toward long-term incentive compensation rather than cash compensation.

Equity Award Mix Typically, the Committee grants equity awards in the form of RSU awards that may be settled for shares of our common stock and/or options to purchase shares of our common stock. Stock options offer our NEOs the right to purchase the stated number of shares of our common stock at an exercise price per share determined on the date of grant. Stock options have value only to the extent the price of our shares on the date of exercise exceeds the applicable exercise price. The exercise price is the fair market value of our common stock based on the stock closing price, as traded on the NYSE, on the grant date. Stock options have a term of seven years from the date of grant. For RSU awards, upon vesting, shares of our common stock are deliverable on a one-for-one basis.

The Committee believes that a significant portion of the equity awards granted to our executive officers, including our NEOs, should be performance-based. Consequently, P-RSU awards have generally comprised approximately 50% of each NEO’s total equity award value, with the remainder subject to time-based vesting requirements, subject to any pre-existing contractual obligations. In fiscal 2017, approximately 50% of our CEO’s long-term incentive compensation opportunity consisted of P-RSU awards.

P-RSU awards are earned upon the achievement of one or more pre-established performance measures and related target levels over a multi-year performance period. For the P-RSU awards granted to our NEOs in fiscal 2017, the Committee selected our TSR relative to the S&P North American Technology Sector Index, measured over a three-year performance period, as the performance objective. We determine relative TSR on a stack- ranked basis using 60-trading day average closing prices of our common stock immediately preceding the beginning and end of the performance period. The shares of our common stock subject to such award will be earned at the end of the three-year performance period based on our actual percentile achievement on a stack- ranked basis, subject to a minimum achievement threshold at the 25th percentile, below which there would be no payout, and a maximum payout of 150% for achievement at the 75th percentile or above. In addition, beginning in fiscal 2017, if our absolute level of TSR is negative, then the payout of our P-RSU awards will be capped at 100% regardless of our percentile achievement. The Compensation Committee believes that in instances where we have a negative TSR, our executives should still be rewarded for superior relative TSR performance, but that it is appropriate that the payout be limited. Our P-RSU awards are also subject to a maximum payout cap (calculated as of the awards’ earnout date) equal to four times the grant date fair market value. In selecting a relative performance measure, the Committee believed that a benchmark against an industry performance index was appropriate to control for factors, such as overall economic conditions, that are outside of our NEOs’ control. Beginning with the awards granted in fiscal 2018, the Board determined to use a broad-based market index that more closely aligned with the Company’s market capitalization.

Changes to Long-Term Incentive Compensation beginning in Fiscal 2018. Beginning in fiscal 2018, our P-RSU awards will be based on a comparison of our TSR over the three-year performance period relative to the S&P MidCap 400 Index. The Committee determined that it was more appropriate to use a broad-based index with companies whose market capitalization more closely tracked that of Verifone rather than a sector-based index whose companies had a broad range of market capitalizations. We are also a constituent member of the S&P MidCap 400 Index.

Accounting Considerations. All equity awards are accounted for in accordance with FASB ASC Topic 718, Share-Based Payment. The Committee considers the stock-based compensation expense that would be recorded for financial reporting purposes for the stock options and RSU awards granted to our NEOs as part of its evaluation of our long-term incentive compensation program.

2018 Proxy Statement 37 Equity Grant Practices. Equity awards, including annual awards and awards for new hires, are generally approved by the Committee during one of its scheduled quarterly meetings. Generally, our executive officers are considered for equity awards on an annual basis, which are generally approved by the Committee at its meeting in the first quarter of a fiscal year. In general, the Committee places significant weight on a value-based approach for equity awards and, as noted above, weights executive compensation more heavily toward long-term incentive compensation.

Fiscal 2017 Equity Awards As described above, the Committee believes that equity awards encourage a strong ownership stake in Verifone and align the interests of our NEOs with those of our stockholders. In addition, these equity awards are intended to serve as incentives for our NEOs to remain with us, continue performance at levels consistent with our corporate objectives and tie a substantial amount of their overall target total direct compensation to our long- term stock performance and profitability. In determining the amount of the fiscal 2017 equity awards for our NEOs, the Committee took into consideration the compensation mix specified in our program design, competitive market data (including compensation peer group data and compensation survey data), each NEO’s individual performance and growth potential, the scope and impact of their role relative to our strategy, and the retention value of the reward.

In January 2017, each of our NEOs was granted a P- RSU award and a time-based RSU award. The P-RSU awards were granted subject to the performance measure described above. Such awards are to be earned (if at all) at the end of the three-year performance period with payout scaled at actual percentile achievement on a stack-ranked basis, subject to a minimum achievement threshold at the 25th percentile below which there would be no payout, and a maximum payout of 150% for achievement at or above the 75th percentile. There is no payout on such awards if the minimum achievement threshold is not met. This further highlights that when the Company does not perform above the 25th percentile of the S&P North American Technology Sector Index, the NEOs will not realize any consideration under the P-RSU awards and that realized compensation of the NEOs will ultimately be significantly impacted by the Company’s relative stock price performance. Consistent with the practice of other companies in the technology industry, the time-based RSU awards were granted with a four-year vesting requirement, with 25% of the shares of our common stock subject to the awards vesting approximately one year after the grant date and the remaining shares vesting in equal quarterly installments over the following three years.

The equity awards granted to our NEOs in fiscal 2017 were as follows:

Performance- Restricted Stock Restricted Stock Based Restricted Performance- Unit Award Unit Award Aggregate Stock Based Restricted with Time- with Time- Grant Date Unit Award Stock Based Vesting Based Vesting Fair Value Named Executive (Shares) Unit Award ($)(1) (Shares) ($)(1) ($)(1) Paul Galant 126,711 $2,500,008 144,926 $2,617,364 $5,117,372 Marc Rothman 35,479 $ 700,000 40,580 $ 732,875 $1,432,875 Albert Liu 35,479 $ 700,000 40,580 $ 732,875 $1,432,875 Glen Robson 40,548 $ 800,012 46,377 $ 837,569 $1,637,581 Vin D’Agostino 20,274 $ 400,006 23,189 $ 418,793 $ 818,799 (1) Amounts shown reflect the total fair value of the stock awards at the date of grant, also referred to as grant date fair value, as computed in accordance with FASB ASC Topic 718. These amounts reflect the accounting expense to be recorded for the award and do not reflect the actual value that may be recognized by an NEO or whether the NEO has actually realized a financial benefit from the awards (such as by vesting in an RSU award). The fair value for time-based RSUs was estimated using the closing price of our common stock on the date of grant. The fair value of P-RSUs was estimated based on a Monte-Carlo simulation of each award as of the date of grant. For information on the valuation and valuation assumptions of these awards, see Note 4, Employee Benefit Plans, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended October 31, 2017.

38 2018 Proxy Statement Health and Welfare Benefits We have established a tax qualified Section 401(k) retirement plan for all employees, including our NEOs, based in the United States who satisfy certain eligibility requirements, including requirements relating to age and length of service. We intend for the plan to qualify under Section 401(a) of the U.S. Internal Revenue Code (the “IRC”) so that contributions by employees to the plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan.

In addition, we provide other benefits to our executive officers, including our NEOs. These benefits include medical, dental, and vision benefits, medical and dependent care flexible spending accounts, short-term and long- term disability insurance, accidental death and dismemberment insurance, and basic life insurance coverage. Our NEOs in the United States generally receive the same health and welfare benefits as our other exempt employees.

We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.

Perquisites and Other Personal Benefits We provide limited perquisites and other personal benefits to our NEOs as described in this section and in the Fiscal 2017 Summary Compensation Table when we believe it is appropriate to assist an individual in the performance of his or her duties and for recruitment and retention purposes. With the exception of these items, we do not provide perquisites or other personal benefits to our NEOs.

We provide our CEO with certain fringe benefits, including storage expenses in connection with his relocation. We provide Mr. Rothman with certain benefits consisting of housing near our corporate offices and reimbursement of commuting expenses between Mr. Rothman’s home residence and our corporate offices in San Jose, California, in each case without the accompaniment of a tax “gross-up” or other reimbursement. We also provide Mr. D’Agostino with certain benefits consisting of housing near our corporate offices and reimbursement of commuting expenses between Mr. D’Agostino’s home residence and our corporate offices in San Jose, California, in each case without the accompaniment of a tax “gross-up” or other reimbursement.

Additional Details of our Compensation Policies, Practices and Awards Executive Stock Ownership and Holding Requirements Policy We maintain stock ownership guidelines as approved by our Board that require our CEO to own a minimum number of shares of our common stock valued at five times his annual base salary, our CFO to own a minimum number of shares of our common stock valued at four times his annual base salary and our other NEOs to own a minimum number of shares of our common stock valued at three times his or her annual base salary.

Under these guidelines, unvested restricted stock awards and RSU awards and owned shares of our common stock count toward satisfying the ownership level. Executive officers appointed prior to the effectiveness of the original guidelines in March 2010 had until March 17, 2015, the fifth year anniversary of the original effective date of the policy, to achieve the relevant stock ownership level. An executive officer who was appointed after the adoption of the guidelines has five years from his or her date of appointment to comply with the guidelines. Executive officers who subsequently get promoted to a higher level must achieve their previous target shares within the initial five-year period, but will have until five years from the date of their promotion to achieve the incremental ownership requirement. Any executive officer who fails to meet or maintain these ownership requirements by the required time frame will be required to retain all shares of our common stock acquired upon exercise of stock options or vesting of restricted stock or RSU awards, net of shares withheld for taxes or to pay the exercise price, until such ownership guidelines are attained. Executive stock ownership is reviewed quarterly by the Committee. As of October 31, 2017, all executive officers who have reached the five-year required time frame for compliance have been and are currently compliant with the executive ownership guidelines.

2018 Proxy Statement 39 Adjustment or Recovery of Awards; Compensation Recovery (Clawback) Policy The Committee has adopted a compensation recovery (“clawback”) policy which provides that in the event of a financial restatement, any incentive-based compensation in the form of cash awards paid to an executive officer (which includes all our NEOs) in the three-year period preceding the restatement that would not have been paid to such executive officer based on the restated financial results will be returned to the Company. Such return may be in the form of: (1) a cash payment to the Company; (2) an agreement to withhold an appropriate amount from the executive officer’s base salary over a 12 month period; (3) the reduction of future incentive-based compensation payouts; and/or (4) cancellation of unvested equity awards, as may be agreed between Verifone and such executive officer. Further, all forms of incentive-based compensation (cash and equity) paid or awarded to an executive officer (which includes all our NEOs) in the three fiscal years preceding any fraud or gross misconduct will be returned to Verifone in the event such executive officer is determined by our Board (in its sole discretion) to have committed such fraud or gross misconduct, with the terms of such return to be set by our Board in its sole discretion. Although waivers of the compensation recovery policy may be made at our Board’s sole discretion, we anticipate waiver would occur only on a rare and exceptional basis.

The Committee intends to evaluate this policy at such time as the SEC adopts final rules implementing the requirements of Section 954 of the Dodd-Frank Act.

Policy Prohibiting Derivative Transactions and Pledging or Hedging In accordance with our insider trading policy, we do not permit any employee, including any executive officer, or any non-employee director to enter into derivative transactions on our securities (including short-sales, market options, or other transactions on derivatives of our securities) or to hedge, hedge against losses of, or pledge our securities.

Post-Employment Compensation Policy We provide certain severance payments and benefits to our executive officers, including our NEOs, in the event of a “change in control” of Verifone. These post-employment compensation arrangements are generally implemented through our Executive Severance Plan, which provides severance benefits to employees designated as participants by the Committee upon certain qualifying terminations. Mr. Galant’s post-employment compensation arrangements are implemented through his employment agreement. Please refer to the “Potential Payments Upon Termination or Change in Control” section below for a more detailed discussion of our post- employment compensation arrangements, Executive Severance Plan, severance benefits and treatment of equity awards upon a change in control.

Income Tax Considerations Section 162(m) of the IRC places a limit on the tax deduction for compensation in excess of $1 million paid to certain “covered employees” of a publicly held corporation. For taxable years ending December 31, 2017 and earlier, “covered employees” generally referred to the company’s chief executive officer and its next three most highly compensated executive officers (other than the chief financial officer) in the year that the compensation is paid. This limitation does not apply to compensation that is considered “qualified performance-based compensation” under the rules of Section 162(m).

The exemption from Section 162(m)’s deduction limitation for “qualified performance-based compensation” has been repealed by recent legislation, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017 (the scope of which is uncertain under the legislation). In addition, beginning with taxable years beginning after December 31, 2017, “covered employees” generally was expanded to include the Company’s chief financial officer; also, each individual who is a covered employee for any taxable year beginning after December 31, 2016 will remain a covered employee for all future years. The Committee continues to evaluate the changes to Section 162(m) and their significance to our compensation programs, but its primary focus in its compensation decisions will remain on most productively furthering our business objectives and not on whether compensation is deductible.

Generally, the Committee has sought to qualify the performance-based incentive compensation paid or awarded to the NEOs for the “performance-based compensation” exemption from the deduction limitation of

40 2018 Proxy Statement Section 162(m) to the extent that we determine it to be in the best interests of Verifone and our stockholders. In addition, in approving the amount and form of compensation for the NEOs, the Committee considered all elements of our cost of providing such compensation, including the potential impact of Section 162(m).

The Committee believes that it is important to retain the flexibility to motivate superior performance through plans and awards that do not satisfy all of the conditions of an exemption from Section 162(m). The Committee believes that the benefit to Verifone from these awards outweighs the potential benefit of ensuring the tax deductibility of the remuneration realized by the NEOs from these awards. Accordingly, from time to time, the Committee retained the discretion, in its judgment, to approve compensation for the NEOs that did not comply with an exemption from the deduction limitation when it believed that such compensation was in the best interests of Verifone and our stockholders.

Fiscal 2017 Summary Compensation Table The following table sets forth information regarding compensation of our NEOs for fiscal 2017, 2016 and 2015.

Change in Pension Value and Nonqualified Non-Equity Deferred Stock Option Incentive Plan Comp All Other Fiscal Salary Bonus Awards Awards Compensation Earnings Compensation Total Year ($) ($) ($)(1)(3) ($)(2)(3) ($) ($) ($) ($) Paul Galant(4) 2017 800,000 — 5,117,372 — 937,090 — 30,523 6,884,985 CEO 2016 800,000 — 4,976,693 — — — 165,018 5,941,711 2015 800,000 — 6,095,840 — 1,713,600 — 18,583 8,628,023 Marc Rothman(5) 2017 450,000 — 1,432,875 — 301,209 — 81,747 2,265,831 EVP and CFO 2016 450,000 — 1,590,694 — — — 67,223 2,107,917 2015 450,000 — 2,127,944 — 479,250 — 71,974 3,129,168 Albert Liu(6) 2017 400,000 — 1,432,875 — 267,741 — 29,587 2,130,203 Former EVP Corporate Development 2016 400,000 — 1,615,534 — — — 18,502 2,034,036 & General Counsel 2015 400,000 — 2,127,944 — 426,000 — 16,307 2,970,251 Glen Robson(7) 2017 450,000 — 1,637,581 — 301,209 — 29,057 2,417,847 EVP, Global Head of Solutions 2016 450,000 — 1,739,814 — — — 17,912 2,207,726 2015 354,807 1,600,000 2,635,920 — 334,875 — 40,972 4,966,574 Vin D’Agostino(8) 2017 400,000 — 818,799 — 267,741 — 254,917 1,741,457 EVP, Chief Strategy Officer 2016 393,333 — 894,774 — — — 19,039 1,307,146 2015 — — — — — — — — (1) Amounts shown reflect the total fair value of the stock awards at the date of grant, also referred to as grant date fair value, as computed in accordance with FASB ASC Topic 718. These amounts reflect the accounting expense to be recorded for the award and do not reflect the actual value that may be recognized by an NEO or whether the NEO has actually realized a financial benefit from the awards (such as by vesting in an RSU award). The fair value for time-based RSUs is estimated using the closing price of our common stock on the date of grant. The fair value of P-RSUs is estimated based on a Monte-Carlo simulation of each award as of the date of grant. For information on the valuation and valuation assumptions of these awards, see Note 4, Employee Benefit Plans, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended October 31, 2017. If we assume that the highest level of performance conditions will be achieved with respect to the P- RSUs (and thus the maximum number of shares will be issued under the RSUs), using the fair value of our common stock on the grant date for such shares, the fiscal 2017 stock awards would be as follows: $6,049,974 for Mr. Galant; $1,694,010 for Mr. Rothman; $1,694,010 for Mr. Liu; $1,936,014 for Mr. Robson; and $968,016 for Mr. D’Agostino. (2) Amounts shown reflect the aggregate grant date fair value of stock options as computed in accordance with FASB ASC Topic 718. These amounts reflect the accounting expense to be recorded for the award and do not reflect the actual value that may be recognized by an NEO or whether the NEO has actually realized a financial benefit from the awards (such as by exercising stock options). The fair value was estimated using the Black-Scholes-Merton option pricing model as of the date of grant in accordance with FASB ASC Topic 718. Pursuant to SEC rules, amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For information on the valuation assumptions used for the calculation of these awards, see Note 4, Employee Benefit Plans, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended October 31, 2017. (3) For additional information on the equity awards granted to the NEOs for fiscal 2017, see “Fiscal 2017 Equity Awards” and “Grants of Plan- Based Awards for Fiscal 2017” in the Compensation Discussion and Analysis above. (4) The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2017 represents a performance-based cash bonus of $937,090 for the corporate component earned at 67%. No Non-Equity Incentive Plan Compensation was paid to Mr. Galant in fiscal

2018 Proxy Statement 41 2016 in light of our financial performance. The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2015 represents a performance-based cash bonus of $828,000 for the corporate component earned at 92%, $600,000 for the individual scorecard component earned at 200% and $285,600 representing a 20% discretionary increase to the cash bonus achievement. The amount shown in the “All Other Compensation” column for fiscal 2017 includes $866 relating to storage of household goods and moving expenses associated with Mr. Galant’s move from rental housing to a permanent residence in California as per the terms of his employment agreement, $10,800 of company 401(k) matching contributions, $1,140 of life insurance premiums and $17,717 of other perquisites. (5) The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2017 represents a performance-based cash bonus of $301,209 for the corporate component earned at 67%. No Non-Equity Incentive Plan Compensation was paid to Mr. Rothman in fiscal 2016 in light of our financial performance. The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2015 represents a performance-based cash bonus of $310,250 for the corporate component earned at 92%, and $169,000 for the individual scorecard component earned at 150%. The amount shown in the “All Other Compensation” column for fiscal 2017 includes $52,690 in housing and commute reimbursements, $10,800 of company 401(k) plan matching contribution, $1,140 of life insurance premiums and $17,117 of other perquisites. (6) The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2017 represents a performance-based cash bonus of $267,741 for the corporate component earned at 67%. No Non-Equity Incentive Plan Compensation was paid to Mr. Liu in fiscal 2016 in light of our financial performance. The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2015 represents a performance-based cash bonus of $276,000 for the corporate component earned at 92% and $150,000 for the individual scorecard component earned at 150%. The amount shown in the “All Other Compensation” column for fiscal 2017 includes $10,800 of company 401(k) plan matching contribution, $1,140 of life insurance premiums and $17,647 of other perquisites. (7) The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2017 represents a performance-based cash bonus of $301,209 for the corporate component earned at 67%. No Non-Equity Incentive Plan Compensation was paid to Mr. Robson in fiscal 2016 in light of our financial performance The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2015 represents a prorated performance-based cash bonus of $245,000 for the corporate component earned at 92%, $89,675 for the prorated individual scorecard component earned at 100%. Mr. Robson also received a $1,600,000 sign-on bonus as a make-whole cash payment for a cash incentive payment Mr. Robson forfeited to join the Company. The bonus is subject to recovery of $1,000,000 of the bonus if such resignation or termination for cause occurs after the second anniversary but before the third anniversary of his employment commencement date as described under “Employment Arrangements with the NEOs” above. The amount shown in the “All Other Compensation” column for fiscal 2017 includes $10,800 of company 401(k) plan matching contribution, $1,140 of life insurance premiums and $17,117 of other perquisites. (8) The amount shown in the “Non-Equity Incentive Plan Compensation” column for fiscal 2017 represents a performance-based cash bonus of $267,741 for the corporate component earned at 67%. No Non-Equity Incentive Plan Compensation was paid to Mr. D’Agostino in fiscal 2016 in light of our financial performance. The amount shown in the “All Other Compensation” column for fiscal 2017 includes $225,860 in housing and commute reimbursements (which includes a $138,000 adjustment for housing and commute reimbursements for fiscal 2016), $10,800 of company 401(k) plan matching contribution, $1,140 of life insurance premiums and $17,117 of other perquisites.

42 2018 Proxy Statement Fiscal 2017 Grants of Plan-Based Awards Table The following table sets forth information with respect to grants of plan-based awards in fiscal 2017 to our NEOs, including cash awards and equity awards. The equity awards granted to the NEOs in fiscal 2017 were granted under our 2006 Equity Plan.

Estimated All Other All Other Possible Payouts Stock Option Under Non- Estimated Possible Payout Awards: Awards: Grant Equity Incentive Plan Under Equity Incentive Number Number Exercise Date Fair Awards(1) Plan Awards of of or Base Value of Shares of Securities Price of Stock and Board Thres- Thres- Stock or Underlying Option Option Grant Approval hold Target Maximum hold Target Maximum Units Options Awards Awards Name Date Date ($) ($) ($) (#) (#) (#) (#) (#) ($/Sh.) ($)(2) Paul Galant(3)(4) — — — 1,400,000 2,800,000 — — — — — — — CEO 1/3/2017 12/14/2016 — — — 63,356 126,711 190,067 — — — 2,500,008 1/3/2017 12/14/2016 — — — — — — 144,926 — — 2,617,364 Marc Rothman(3)(4) — — — 450,000 900,000 — — — — — — — EVP and CFO 1/3/2017 12/14/2016 — — — 17,740 35,479 53,219 — — — 700,001 1/3/2017 12/14/2016 — — — — — — 40,580 — — 732,875 Albert Liu(3)(4) — — — 400,000 800,000 — — — — — — — Former EVP Corporate 1/3/2017 12/14/2016 — — — 17,740 35,479 53,219 — — — 700,001 Development & General Counsel 1/3/2017 12/14/2016 — — — — — — 40,580 — — 732,875 Glen Robson(3)(4) — — — 450,000 900,000 — — — — — — — EVP, Global Head of 1/3/2017 12/14/2016 — — — 20,274 40,548 60,822 — — — 800,012 Solutions 1/3/2017 12/14/2016 — — — — — — 46,377 — — 837,569 Vin D’Agostino(3)(4) — — — 400,000 800,000 — — — — — — — EVP, Chief Strategy 1/3/2017 12/14/2016 — — — 10,137 20,274 30,411 — — — 400,006 Officer 1/3/2017 12/14/2016 — — — — — — 23,189 — — 418,793 (1) Amounts shown in these columns represent the range of possible cash payouts for each NEO under our short-term incentive awards. Amount shown as estimated target payout is based upon achievement of performance targets at 100% for the respective performance periods. Amount shown as estimated maximum possible payout assumes the achievement of the maximum payout cap of 200% of target for our short-term incentive awards. The performance period for these awards is our fiscal year ended October 31, 2017. The short-term cash incentive compensation award payouts made to our NEOs and other executive officers for fiscal 2017 were paid at 67% of their target short-term incentive compensation opportunity due to our fiscal 2017 financial performance. (2) Reflects the grant date fair value of each equity award at the target performance level computed in accordance with FASB ASC Topic 718 and described in footnotes 1 and 2 to the Fiscal 2017 Summary Compensation Table. The assumptions used in the valuation of these awards are set forth in the notes to our consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended October 31, 2017. These amounts may not correspond to the actual value that will be realized by the NEOs. (3) Shares subject to award will cliff vest three years from the grant date (on January 3, 2020), if we achieve a certain level of TSR relative to the S&P North American Technology Sector Index over a three-year performance period. For purposes of the grant, TSR will be calculated on a stack- ranked basis using 60-trading day average closing prices immediately preceding the beginning and end of the performance period. Payout will be at target (e.g., 126,711 shares of common stock for Mr. Galant’s award) for TSR at the 50th percentile, scaling for performance above and below the 50th percentile (e.g., 60th percentile ranking results in payout at 120% of target or 152,053 shares of common stock for Mr. Galant’s award). The threshold for any payout under the grant is the 25th percentile (e.g., no shares of common stock will be awarded for performance below the 25th percentile) and the maximum payout is 150% of target (e.g., 190,067 shares for Mr. Galant’s award) at the 75th percentile or above. (4) Shares subject to award vest as to 1/4 of the shares on January 3, 2018 and 1/16 of shares each quarter thereafter.

2018 Proxy Statement 43 Employment Agreements and Offer Letters Mr. Galant Mr. Galant has served as our CEO from October 1, 2013. In connection with his appointment as our CEO, we entered into an employment agreement with him, which set his base salary and target annual cash bonus opportunity at levels consistent with that of our former CEO. Mr. Galant’s employment agreement was renewed at the end of its original term for a period from November 1, 2017 through October 31, 2021, unless earlier terminated as provided in the agreement. Mr. Galant’s employment agreement provides for an annual base salary of at least $800,000 and a target annual cash bonus opportunity of not less than 175% of his annual base salary ($1,400,000). No changes were made to Mr. Galant’s annual base salary or target annual cash bonus opportunity from existing levels as part of the renewal of Mr. Galant’s employment agreement.

Under Mr. Galant’s amended employment agreement, the amount of regular annual awards is still as determined by the Committee in accordance with our executive compensation program and practices, which includes consideration of our and Mr. Galant’s performance, compensation analyses prepared by the Committee’s compensation consultant and other factors as determined by the Committee.

Severance and Change in Control. Mr. Galant’s employment agreement also provides for certain severance payments and benefits, including payments in the event of a change in control of Verifone as described under “Potential Payments Upon Termination or Change in Control—Severance Arrangements” below.

Mr. Robson Mr. Robson joined us as Executive Vice President, Global Head of Solutions in January 2015. In setting his compensation, the key factors considered by the Committee included a competitive market compensation analysis, Mr. Robson’s compensation at his then-current executive position as Chief Technology Officer for Dell’s Client Product Group and his extensive experience as an innovator for new products and technologies. In addition to setting an initial annual base salary and target annual cash bonus opportunity, Mr. Robson’s offer letter included the following negotiated provisions: Sign-On Bonus. A sign-on bonus of $1,600,000 payable within ten business days of his employment start date of January 19, 2015, subject to return of $1 million of the bonus if such resignation or termination of employment for cause occurred after the second anniversary but before the third anniversary of his employment commencement date.

Long-Term Incentive Equity Awards. An initial RSU award with a grant date fair value of $3 million, 50% of which cliff vested on the first anniversary of the date of grant (which anniversary occurred on February 2, 2016) and 50% of which cliff vested on the second anniversary of the date of grant (February 2, 2017).

Severance and Change in Control. Certain severance payments and benefits, including payments in the event of a change in control of Verifone, as described under “Potential Payments Upon Termination or Change in Control—Severance Arrangements” below.

Mr. Robson’s sign-on bonus and initial RSU grant included terms that were intended as one-time “make- whole” components and were designed to be competitive with the terms of his compensation at Dell. The Committee does not consider such compensation components to be typical of our compensation program or philosophy and, accordingly, does not take such components into consideration when making ongoing compensation decisions for Mr. Robson, but rather were appropriate to encourage him to join Verifone.

44 2018 Proxy Statement Mr. Rothman Mr. Rothman joined us as Executive Vice President and Chief Financial Officer effective February 4, 2013. In addition to setting forth an initial annual base salary of $450,000, target annual cash bonus opportunity of $350,000 and a proposed equity award recommendation with a grant date fair value of $3 million (which was approved in fiscal 2013), Mr. Rothman’s offer letter included the following additional negotiated provisions: Commuting and Housing Expenses. Under the terms of his offer letter, we reimburse Mr. Rothman for commuting expenses between his primary residence and our offices in San Jose, California on a weekly basis and certain housing costs near our San Jose offices. Such reimbursement does not include a tax “gross up” or other reimbursement for any associated income taxes.

Severance and Change in Control. Mr. Rothman’s offer letter provides for certain severance payments and benefits, including payments in the event of a change in control of Verifone, as described under “Potential Payments Upon Termination or Change in Control—Severance Arrangements” below.

Mr. D’Agostino Mr. D’Agostino joined us as Senior Vice President, Global Business Development in January 2014. In setting his compensation, the key factors considered by the Committee included a competitive market compensation analysis, Mr. D’Agostino’s background and technical experience in the areas that were critical for the role we sought to fill and the importance of the business development executive role as part of our transformation initiatives. In addition to setting forth an initial annual base salary of $360,000 and target annual cash bonus opportunity of $240,000, Mr. D’Agostino’s offer letter included the following additional negotiated provisions with respect to outstanding, unvested awards and benefits: Long-Term Incentive Equity Awards. Mr. D’Agostino’s offer letter provides for an initial equity award with a grant date value of $750,000 equally split between a stock option and an RSU award, 25% of which vested on February 3, 2015 and 6.25% of which will vest each quarter thereafter.

2018 Proxy Statement 45 Fiscal 2017 Outstanding Equity Awards at Fiscal Year-End Table The following table provides information about unexercised options, stock awards that have not vested and other equity incentive plan awards that have not vested for each of the NEOs as of October 31, 2017.

Option Awards Stock Awards

Equity Equity Incentive Incentive Plan Plan Awards: Awards: Market Equity Number of or Payout Incentive Unearned Value of Plan Market Shares, Unearned Awards: Number of Value of Units or Shares, Number of Number of Number of Shares or Shares or Other Units or Securities Securities Securities Units of Units of Rights Other Option/ Underlying Underlying Underlying Stock That Stock That That Rights That Award Unexercised Unexercised Unexercised Option Option Have not Have not Have not Have not Grant Options (#) Options (#) Unearned Exercise Expiration Vested Vested Vested Vested Name Date Exercisable Unexercisable Options (#) Price ($) Date (#) ($)(1) (#) ($)(1) Paul Galant 10/1/2013(2) 500,000 23.00 10/1/2020 1/2/2015(3) 38,500 734,580 1/2/2015(4) 18,063 344,642 1/4/2016(5) 54,094 1,032,104 1/4/2016(6) 39,938 762,017 1/3/2017(7) 126,711 2,417,646 1/3/2017(8) 144,926 2,765,188 Marc Rothman 1/2/2015(3) 12,025 229,437 EVP and CFO 1/2/2015(4) 7,515 143,386 1/4/2016(5) 14,425 275,229 1/4/2016(6) 15,975 304,803 1/3/2017(7) 35,479 676,939 1/3/2017(8) 40,580 774,266 Albert Liu 1/3/2012(9) 51,300 36.46 1/3/2019 Former EVP, 1/3/2012(10) 51,300 36.46 1/3/2019 Corporate Development & 1/2/2015(3) 12,025 229,437 General 1/2/2015(4) 7,515 143,386 Counsel 1/4/2016(5) 14,651 279,532 1/4/2016(6) 16,225 309,573 1/3/2017(7) 35,479 676,939 1/3/2017(8) 40,580 774,266 Glen Robson 1/4/2016(5) 15,778 301,035 EVP, Global 1/4/2016(6) 17,473 333,385 Head of Solutions 1/3/2017(7) 40,548 773,656 1/3/2017(8) 46,377 884,873 Vin D’Agostino 2/3/2014(11) 30,450 4,350 4,350 27.77 2/3/2021 EVP, Chief 2/3/2014(11) 1,763 33,638 Strategy Officer 1/2/2015(3) 3,450 65,826 1/2/2015(4) 2,157 41,156 1/4/2016(5) 8,114 154,815 1/4/2016(6) 8,987 171,472 1/3/2017(7) 20,274 386,828 1/3/2017(8) 23,189 442,446 (1) Market value of units of stock that have not vested is computed by multiplying (i) $19.08, the closing market price of our stock on October 31, 2017, the last trading day of fiscal 2017, by (ii) the number of units of stock. (2) Shares subject to award vested as to 1/4 of the shares on October 1, 2014 and 1/16 of the shares each quarter thereafter. (3) Awards are shown at threshold payout. Whether these awards will be earned at the level shown, a different level or at all depends on performance against pre-established metrics over a three-year performance period. Shares subject to award will cliff vest three years from the grant date (on January 2, 2018), if we achieve a certain level of TSR relative to the S&P North American Technology Sector Index over the performance period.

46 2018 Proxy Statement For purposes of the grant, TSR will be calculated on a stack-ranked basis using a 60-trading day average closing price immediately preceding the beginning and end of the performance period. Payout shall be at target for TSR at the 50th percentile, scaling for performance above and below the 50th percentile (e.g., 60th percentile ranking results in payout at 120% of target). The threshold for any payout under the grant is the 25th percentile (i.e., no shares of common stock will be awarded for performance below the 25th percentile) and the maximum payout is 200% of target at the 100th percentile. The final payout was 0% of the target for TSR below 25th percentile. (4) Shares subject to award vest as to 1/4 of the shares on January 2, 2016 and 1/16 of shares each quarter thereafter. (5) Awards are shown at threshold payout. Whether these awards will be earned at the level shown, a different level or at all depends on performance against pre-established metrics over a three-year performance period. Shares subject to award will cliff vest three years from the grant date (on January 4, 2019), if we achieve a certain level of TSR relative to the S&P North American Technology Sector Index over the performance period. For purposes of the grant, TSR will be calculated on a stack-ranked basis using a 60-trading day average closing price immediately preceding the beginning and end of the performance period. Payout shall be at target for TSR at the 50th percentile, scaling for performance between the 25th and the 75th percentile (e.g., 60th percentile ranking results in payout at 120% of target). The threshold for any payout under the grant is the 25th percentile (i.e., no shares of common stock will be awarded for performance below the 25th percentile) and the maximum payout is 150% of target at the 75th percentile or above. (6) Shares subject to award vest as to 1/4 of the shares on January 4, 2017 and 1/16 of shares each quarter thereafter. (7) Awards are shown at target payout. Whether these awards will be earned at the level shown, a different level or at all depends on performance against pre-established metrics over a three-year performance period. Shares subject to award will cliff vest three years from the grant date (on January 3, 2020), if we achieve a certain level of TSR relative to the S&P North American Technology Sector Index over the performance period. For purposes of the grant, TSR will be calculated on a stack-ranked basis using a 60-trading day average closing price immediately preceding the beginning and end of the performance period. Payout shall be at target for TSR at the 50th percentile, scaling for performance between the 25th and the 75th percentile (e.g., 60th percentile ranking results in payout at 120% of target). The threshold for any payout under the grant is the 25th percentile (i.e., no shares of common stock will be awarded for performance below the 25th percentile) and the maximum payout is 150% of target at the 75th percentile or above. (8) Shares subject to award vest as to 1/4 of the shares on January 3, 2018 and 1/16 of shares each quarter thereafter. (9) Shares subject to award vested as to 1/4 of the shares on January 3, 2013 and 1/16 of shares each quarter thereafter. (10) Shares subject to award cliff vested on January 3, 2013. (11) Shares subject to award vested as to 1/4 of the shares on February 3, 2015 and 1/16 of shares each quarter thereafter.

Fiscal 2017 Option Exercises and Stock Vested Table The following table presents information concerning the aggregate number of shares of our common stock that were acquired upon the vesting of stock awards during fiscal 2017 for each of the NEOs on an aggregated basis. None of the NEOs exercised any stock options during fiscal 2017.

Option Awards Stock Awards Value Number of Realized Number of Value Shares on Shares Realized on Acquired on Exercise Acquired on Vesting Name Exercise ($) Vesting ($)(1) Paul Galant — $ — 45,513 $ 853,194 CEO Marc Rothman — $ — 42,034 $ 775,016 EVP and CFO Albert Liu(2) — $ — 48,741 $ 845,339 Former EVP, Corporate Development & General Counsel Glen Robson — $ — 55,590 $1,025,698 EVP, Global Head of Solutions Vin D’Agostino — $ — 12,239 $ 226,477 EVP, Chief Strategy Officer (1) The value realized on the shares acquired is the fair market value of the shares on the date of vesting, which was the closing price of our common stock on such date as traded on the NYSE. (2) The amount listed under the “Number of Shares Acquired on Vesting” column includes the deferred release of 28,571 shares vested in prior years and the amount listed under the “Value of Realized Vesting” column includes the value of these shares: $468,279.

Potential Payments Upon Termination or Change in Control This section describes the payments and benefits that may become payable to the NEOs in connection with a termination of their employment with Verifone, including a termination of employment in connection with a change in control of Verifone, under arrangements in effect as of October 31, 2017. Under our change in control

2018 Proxy Statement 47 provisions, severance payments and accelerated vesting of outstanding equity awards (as described below) are subject to “double-trigger” arrangements, meaning that such payments and benefits are only provided if a qualifying termination of employment occurs in connection with a change in control of Verifone. In each case, a “change in control” event is defined as the occurrence of any of the following: (i) any person becoming the beneficial owner of 50% (except in limited instances where the threshold was set to 40%) or more of the total voting power of the Company’s then outstanding securities, (ii) upon the consummation of a merger, consolidation or similar transaction involving the Company (subject to certain customary exceptions), (iii) certain changes to the composition of our board of directors as specified in the 2006 Equity Plan, (iv) our stockholders’ approval of a plan of liquidation or dissolution of the Company, or (v) the sale of all or substantially all of the Company’s assets to a non-affiliate.

Post-Employment Compensation Arrangements The Committee believes that it is in our best interests to provide certain severance payments and benefits to our executive officers, including our NEOs, in the event of a “change-in-control” of Verifone, to both retain talent and maintain a stable management team leading up to, and during, a change in control event. The Committee also believes that it is in our best interests to provide certain severance payments and benefits to our executive officers, including our NEOs in connection with a “qualifying termination of employment” (generally defined to mean a termination of employment by us other than for cause or a termination by the executive officer for good reason) in situations not involving a change in control of Verifone, to provide specificity and certainty, both for our executive officers and us, as it will not only promote executive retention and provide leadership stability, but also enable us to develop our business plans with more clarity as to executive retention costs.

Our post-employment compensation arrangements with our executive officers, including our NEOs, are generally implemented through our Executive Severance Plan, as described in greater detail below. We also have entered into post-employment compensation arrangements with certain of our executive officers (typically in connection with their hire), including Messrs. Galant and Rothman through their employment agreement and offer letter, respectively. Mr. Galant’s post-employment compensation arrangements are generally implemented through his employment agreement.

Executive Severance Plan On September 18, 2016, our previous executive severance policy expired in accordance with its terms. Effective September 19, 2016, the Committee approved, and our Board adopted, the Executive Severance Plan. The Executive Severance Plan provides severance payments and benefits to employees designated as participants by the Committee upon certain qualifying terminations of employment and also specifies the treatment of performance-based equity awards granted after September 19, 2016 upon a change in control of Verifone. All payments and other benefits under the Executive Severance Plan are subject to the participant’s execution of a general release of claims against Verifone and compliance with certain non-competition, non-solicitation, confidentiality and non-disparagement covenants. The Executive Severance Plan will terminate on October 31, 2020. All of the NEOs other than Mr. Galant participate in the Executive Severance Plan.

Executive Severance Plan—Non-Change in Control Payments and Benefits Under the terms of the Executive Severance Plan, during any period of time that is not a period beginning three months prior to and extending 12 months after a change in control of Verifone (a “CIC Protection Period”), in the event of a termination of a participant’s employment by us other than for “cause” or by the participant for “good reason” (in each case, as defined in the Executive Severance Plan), the participant will be entitled to receive (i) a lump sum cash payment equal to 12 months’ base salary; and (ii) 12 months’ health and life insurance benefits continuation coverage, subject to certain exceptions (“Benefits Continuation Coverage”), each as described in greater detail in the Executive Severance Plan.

Executive Severance Plan—Change in Control Payments and Benefits Under the terms of the Executive Severance Plan, in the event of a termination of a participant’s employment during a CIC Protection Period by us other than for “cause” or by the participant for “good reason” (in each case, as defined in the Executive Severance Plan), the participant will be entitled to receive (i) a lump sum cash payment equal to 12 months’ base salary; (ii) a lump sum cash payment equal to the participant’s target annual

48 2018 Proxy Statement cash bonus for the year in which his or her termination of employment occurs; and (iii) Benefits Continuation Coverage, all as described in greater detail in the Executive Severance Plan.

No Change in Control Tax Gross Ups We do not provide tax “gross-ups” or other reimbursements for potential excise or other taxes on any payments or benefits that are paid in connection with a change in control event.

Treatment of Equity Awards Upon a Change in Control Acceleration of Equity Awards upon a Termination of Employment in Connection with a Change in Control Our long-term incentive equity awards granted to certain NEOs, Mr. Galant’s employment agreement and the Executive Severance Plan, provide for full vesting of all outstanding and unvested equity-based awards in the event of a qualifying termination of employment during a CIC protection period. The Committee believes that these benefits are consistent with general competitive practices and that they help maximize executive retention, which is one of our objectives in making these awards.

Treatment of Performance-Based Equity Awards upon a Change in Control The Executive Severance Plan also provides for the treatment of outstanding performance-based equity awards upon a change in control of Verifone, unless the relevant award agreement provides for alternative treatment. Upon a change in control of Verifone, each outstanding performance-based equity award held by a participant (including each NEO) that was granted after September 19, 2016 will be deemed earned at the actual performance level as of the date of the change in control with respect to all open performance periods. As specified in the Executive Severance Plan, a pro rata portion of the earned award will be payable upon the change in control, based on the number of days elapsed from the beginning of the performance period to the date of the change in control; the remainder of the award will continue to be subject to time-based vesting following the change in control in accordance with the original performance period (subject to the “double-trigger” arrangements described above).

Severance Arrangements Our NEOs other than Mr. Galant participate in the Executive Severance Plan, as described above under “Executive Severance Plan,” under which they are eligible to receive certain payments and benefits upon a qualifying termination of employment, including a termination of employment in connection with a change in control of Verifone, as described above under “Post-Employment Compensation Arrangements.” Mr. Galant is party to an employment agreement that includes certain severance arrangements, as described below.

Mr. Galant Our employment agreement with Mr. Galant provides certain payments and benefits to him in the event of a termination of employment, including a termination of employment in connection with a change in control of Verifone. The conditions that would constitute a change in control event are generally consistent with those described above under “Post-Employment Compensation Arrangements.”

In the event that we terminate his employment without Cause (as defined in his employment agreement), Mr. Galant will be entitled to the following: (i) any unpaid accrued salary and earned but unpaid annual bonus (“Accrued Compensation”) and a lump sum cash severance payment equal to the sum of his annual base salary then in effect and his target bonus for the preceding fiscal year; (ii) for 24 months following his date of termination of employment, we will promptly reimburse him for COBRA premiums and will permit him to continue to participate in our life insurance plan on the same basis as he participated in it as of immediately prior to his termination of employment, subject to certain exceptions (collectively, “Benefit Continuation”); and (iii) unless any applicable equity award agreement provides for more favorable treatment to Mr. Galant, any portion of unvested time-based equity awards that would have otherwise vested on or before the first anniversary of termination shall vest in full, and any portion of unvested performance-based equity awards that would have time-based vested on or before the first anniversary of termination (assuming monthly rather than cliff time-based vesting) shall vest based on actual performance.

2018 Proxy Statement 49 If we terminate his employment without Cause (as defined in his employment agreement) or if he terminates his employment for Good Reason (as defined in his employment agreement) within three months prior to (in the event that his employment is terminated at the request of a third party acquiror) or within 24 months following a change in control of Verifone (the “Change in Control Protection Period”), (i) we will pay Mr. Galant the Accrued Compensation and a lump sum cash severance payment equal to twice the sum of his annual base salary then in effect and his target annual bonus, (ii) he will be entitled to receive the Benefit Continuation and (iii) he will receive accelerated vesting in full of all outstanding equity awards.

Our obligations to provide the severance payments and benefits described above (other than the payment of the Accrued Compensation) are subject to Mr. Galant executing a release in favor of us and compliance with certain non-competition, non-solicitation and non-disparagement covenants.

If we terminate his employment for Cause, he terminates his employment without Good Reason, or his employment terminates due to death or disability (as defined in his employment agreement), we will promptly pay or provide Mr. Galant (i) the Accrued Compensation, except that any earned but unpaid annual bonus will be forfeited in the event of a termination of employment for Cause, (ii) any benefits that are required, or to which he is entitled, under any of our employee benefit plans or contracts or arrangements with us, and (iii) any other payments or benefits required to be paid to him in accordance with applicable law. In addition, in the event his employment is terminated due to death or disability, we will pay him or his estate, as applicable, (i) a pro-rata annual bonus at target for the fiscal year during which his death or disability occurs, which will be paid within 60 days following the date of termination of his employment and (ii) provide him with the same vesting benefits as in the case of a termination of employment without Cause not in the Change in Control Protection Period.

Mr. Rothman Our offer letter with Mr. Rothman includes provisions that provide for certain payments and benefits in the event of a termination of his employment. If we terminate his employment without Cause (as defined in his offer letter) or if he terminates his employment for Good Reason (as defined in his offer letter), then we will pay Mr. Rothman, within ten days following the date of termination, a sum equal to the total of: (i) his base salary through the date of termination and any bonuses that have become payable and have not been paid or deferred; (ii) any accrued vacation pay and compensation previously deferred, other than pursuant to a tax-qualified plan; (iii) any amounts due under any plan or program in accordance with their terms; and (iv) a lump-sum cash payment equal to his annual base salary during the six-month period immediately prior to the date of termination. In connection with a qualifying termination of employment, we must also provide Mr. Rothman with continuing medical, insurance and related benefits for six months following the date of such termination.

Mr. Rothman’s offer letter was executed prior to the adoption of the Executive Severance Plan. Accordingly, Mr. Rothman has elected to participate in the Executive Severance Plan, which provides for more favorable severance terms, rather than electing to take the severance payments and benefits under the terms of his offer letter.

Under the severance arrangements of Messrs. Galant and Rothman, “Cause” generally means (i) a conviction of a felony or any crime or offense lesser than a felony involving dishonesty, disloyalty or fraud with respect to Verifone or any related entity or any of their respective properties or assets; (ii) gross negligence or willful misconduct that has caused demonstrable and serious injury to Verifone or a related entity, monetary or otherwise; (iii) willful refusal to perform or substantial disregard of duties properly assigned; (iv) breach of duty of loyalty to Verifone or a related entity or any act of fraud or dishonesty with respect to Verifone or a related entity; (v) the engagement in insider trading; (vi) breach of Verifone’s ethics policy; (vii) engagement in accounting improprieties as determined by our Board in its discretion; (viii) failure or refusal to cooperate with governmental investigations involving Verifone or (ix) the disqualification or bar by any governmental or self-regulatory authority from serving as an officer of Verifone or any related entity. “Good reason” generally means the occurrence of one or more of the following, without the employee’s written consent, and which circumstances are not remedied by Verifone within 30 days of receipt of notice: (i) the assignment to the employee of substantial duties that are materially inconsistent with the employee’s title, position, authority, duties work location or responsibilities or any other action which results in a material diminution or material adverse change in the employee’s title, position, authority, duties, work location or responsibilities; (ii) a material reduction in the employee’s aggregate rate of annual base salary or target annual bonus; or the failure to obtain the assumption of Verifone’s obligations under the severance arrangements by any successor.

50 2018 Proxy Statement Equity Award Agreements Our equity awards granted in fiscal years 2012 through 2017 to the NEOs, and the Executive Severance Plan, provide for acceleration of vesting in the event of an involuntary or constructive termination of employment three months prior to or 12 months following a change in control of Verifone. Mr. Galant’s employment agreement provides for acceleration of vesting in the event of an involuntary or constructive termination of employment three months prior to or 24 months following a change in control of Verifone.

The following tables set forth the estimated payments and benefits payable to each NEO in the event of an involuntary termination of employment, including an involuntary termination of employment in connection with a change in control of Verifone, as if such event had occurred as of October 31, 2017 and based on the market price of our common stock on such date.

Involuntary Termination without Cause or Constructive Involuntary Termination for Good Reason

Intrinsic Value of Cash Continuation of Unvested Stock Intrinsic Value of Name Severance Benefits Awards(1) Unvested Options(2) Paul Galant(3) $1,737,090 $ 29,657 $1,824,151 $ — Marc Rothman(4) $ 450,000 $ 29,057 $ — $ — Vin D’Agostino(5) $ 400,000 $ 29,057 $ — $ — Albert Liu(6) $ 400,000 $ 29,587 $ — $ — Glen Robson(7) $ 450,000 $ 29,057 $ — $ —

Involuntary Termination without Cause or Constructive Involuntary Termination for Good Reason In Connection with a Change in Control

Intrinsic Value of Cash Continuation of Unvested Stock Intrinsic Value of Name Severance Benefits Awards(1) Unvested Options(2) Paul Galant(3) $4,400,000 $ 29,657 $6,120,258 $ — Marc Rothman(4) $ 900,000 $ 29,057 $1,852,009 $ — Vin D’Agostino(5) $ 800,000 $ 29,057 $1,048,462 $ — Albert Liu(6) $ 800,000 $ 29,587 $1,856,779 $ — Glen Robson(7) $ 900,000 $ 20,057 $1,937,758 $ — (1) The intrinsic value of the unvested stock awards is calculated by multiplying (a) $19.08, which was the closing market price per share of our common stock as of October 31, 2017, by (b) the number of shares of our common stock subject to the unvested stock awards eligible for acceleration. See the “Fiscal 2017 Grants of Plan-Based Awards” Table and the “Fiscal 2017 Outstanding Equity Awards at Fiscal Year-End” Table for information on the outstanding stock awards and the unvested portion of such awards. (2) Based on the closing market price per share of our common stock as of October 31, 2017 of $19.08, and the respective exercise prices of unvested options subject to acceleration. No intrinsic value is attributed to unvested options subject to acceleration which have exercise prices above the closing market price of our common stock as of October 31, 2017. (3) The amounts contained in the tables for Mr. Galant are based on the terms of his employment agreement. In the event of an involuntary or constructive termination, Mr. Galant is entitled to cash severance equal to his annual base salary plus the actual annual bonus for the fiscal year preceding the termination date. In the event of an involuntary or constructive termination with a change in control (as defined in Mr. Galant’s employment agreement), Mr. Galant is entitled to cash severance equal to two times his annual base salary and his target annual bonus. In the event of an involuntary or constructive termination, Mr. Galant is entitled to 12 months’ acceleration of his unvested equity awards. In the event of an involuntary or constructive termination with a change in control, Mr. Galant is entitled to full acceleration of his unvested equity awards. The Intrinsic Value of Unvested Stock Awards disclosed for Mr. Galant assumes no achievement of P-RSU awards other than the P-RSU award he received in fiscal 2017, which had an estimated payout of 93%, given the Company’s stock price of $19.08 as of October 31, 2017. For achievement of the P-RSU awards at the threshold amount, Intrinsic Value of Unvested Stock Awards for Mr. Galant would total $2,558,731 in the

2018 Proxy Statement 51 event of an involuntary or constructive termination and $6,847,354 in the event of an involuntary or constructive termination with a change in control. For achievement of the P-RSU awards at the target amount, Intrinsic Value of Unvested Stock Awards for Mr. Galant would total $3,293,311 in the event of an involuntary or constructive termination and $9,822,861 in the event of an involuntary or constructive termination with a change in control. For achievement of the P-RSU awards at the maximum amount, the Intrinsic Value of Unvested Stock Awards for Mr. Galant would total $4,762,471 in the event of an involuntary or constructive termination and $13,532,948 in the event of an involuntary or constructive termination with a change in control. See additional disclosures under “Severance Arrangements.” (4) In the event of an involuntary or constructive termination of employment, Mr. Rothman is entitled under the Executive Severance Plan to a cash payment equal to his annual base salary. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, Mr. Rothman is entitled under the Executive Severance Plan to cash severance equal to his annual base salary plus his target annual bonus. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, the Executive Severance Plan provides for full acceleration of all unvested equity awards. Under the terms of Mr. Rothman’s award agreements, performance-based awards will vest (without proration) based on, and subject to, performance criteria measured through the date of the change in control. See additional disclosures under “Executive Severance Plan.” The Intrinsic Value of Unvested Stock Awards disclosed for Mr. Rothman assumes no achievement of P-RSU awards other than the P-RSU award he received in fiscal 2017, which had an estimated payout of 93%, given the Company’s stock price of $19.08 as of October 31, 2017. For achievement of the P-RSU awards at the threshold amount, the Intrinsic Value of Unvested Stock Awards for Mr. Rothman would total $2,065,591 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the target amount, the Intrinsic Value of Unvested Stock Awards for Mr. Rothman would total $2,908,727 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the maximum amount, the Intrinsic Value of Unvested Stock Awards for Mr. Rothman would total $3,981,300 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. (5) In the event of an involuntary or constructive termination of employment, Mr. D’Agostino is entitled under the Executive Severance Plan to a cash payment equal to his annual base salary. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, Mr. D’Agostino is entitled under the Executive Severance Plan to cash severance equal to his annual base salary plus his target annual bonus. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, the Executive Severance Plan provides for full acceleration of all unvested equity awards. Under the terms of Mr. D’Agostino’s award agreements, performance-based awards will vest based on, and subject to, performance criteria measured through the date of the change in control. See additional disclosures under “Executive Severance Plan.” The Intrinsic Value of Unvested Stock Awards disclosed for Mr. D’Agostino assumes no achievement of P-RSU awards other than the P-RSU award he received in fiscal 2017, which had an estimated payout of 93%, given the Company’s stock price of $19.08 as of October 31, 2017. For achievement of the P-RSU awards at the threshold amount, the Intrinsic Value of Unvested Stock Awards for Mr. D’Agostino would total $1,102,767 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the target amount, the Intrinsic Value of Unvested Stock Awards for Mr. D’Agostino would total $1,516,822 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the maximum amount, the Intrinsic Value of Unvested Stock Awards for Mr. D’Agostino would total $1,996,703 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. (6) In the event of an involuntary or constructive termination of employment, Mr. Liu is entitled under the Executive Severance Plan to a cash payment equal to his annual base salary. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, Mr. Liu is entitled under the Executive Severance Plan to cash severance equal to his annual base salary plus his target annual bonus. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, the Executive Severance Plan provides for full acceleration of all unvested equity awards. Under the terms of Mr. Liu’s award agreements, performance-based awards will vest based on, and subject to, performance criteria measured through the date of change in control. See additional disclosures under “Executive Severance Plan.” The Intrinsic Value of Unvested Stock Awards disclosed for Mr. Liu assumes no achievement of P-RSU awards other than the P-RSU award he received in

52 2018 Proxy Statement fiscal 2017, which had an estimated payout of 93%, given the Company’s stock price of $19.08 as of October 31, 2017. For achievement of the P-RSU awards at the threshold amount, the Intrinsic Value of Unvested Stock Awards for Mr. Liu would total $2,074,664 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the target amount, the Intrinsic Value of Unvested Stock Awards for Mr. Liu would total $2,922,102 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the maximum amount, the Intrinsic Value of Unvested Stock Awards for Mr. Liu would total $3,998,977 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. (7) In the event of an involuntary or constructive termination of employment, Mr. Robson is entitled under the Executive Severance Plan to a cash payment equal to his annual base salary. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, Mr. Robson is entitled under the Executive Severance Plan to cash severance equal to his annual base salary plus his target annual bonus. In the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone, the Executive Severance Plan provides for full acceleration of all unvested equity awards. Under the terms of Mr. Robson’s award agreements, performance-based awards will vest based on, and subject to, performance criteria measured through the date of change in control. See additional disclosures under “Executive Severance Plan.” The Intrinsic Value of Unvested Stock Awards disclosed for Mr. Robson assumes no achievement of P-RSU awards other than the P-RSU award he received in fiscal 2017, which had an estimated payout of 93%, given the Company’s stock price of $19.08 as of October 31, 2017. For achievement of the P-RSU awards at the threshold amount, the Intrinsic Value of Unvested Stock Awards for Mr. Robson would total $1,906,121 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the target amount, the Intrinsic Value of Unvested Stock Awards for Mr. Robson would total $2,593,983 in the event of an involuntary or constructive termination of employment in connection with a change in control of Verifone. For achievement of the P-RSU awards at the maximum amount, the Intrinsic Value of Unvested Stock Awards for Mr. Robson would total $3,281,846 in the event of an involuntary or constructive termination of employment in connection with a change in control in Verifone.

2018 Proxy Statement 53 REPORT OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE

The Compensation and Leadership Development Committee of Verifone (the “Compensation and Leadership Development Committee”) consists exclusively of independent directors. Verifone’s Board of Directors and its Corporate Governance and Nominating Committee have determined that each member of the Compensation and Leadership Development Committee is “independent” within the meaning of the rules of both the NYSE and the SEC.

The general purpose of the Compensation and Leadership Development Committee is to (i) review and approve corporate goals and objectives relating to the compensation of Verifone’s CEO, evaluate the CEO’s performance in light of those goals and objectives and, either as a committee or together with the other independent directors (as directed by the Board), determine and approve the CEO’s compensation level based on this evaluation, (ii) review and approve non-CEO executive officer compensation, incentive compensation plans, and equity-based plans and (iii) oversee non-CEO executive succession planning as well as executive leadership development.

In December 2017, the Compensation and Leadership Development Committee reviewed with management both the long-term and temporary succession plans for the members of the management committee of Verifone, other than the CEO, whose succession plans were reviewed by the full Board of Directors.

In September 2017, the Compensation and Leadership Development Committee reviewed the Compensation and Leadership Development Committee’s charter to determine whether any changes to the charter were deemed necessary or desirable by the Compensation and Leadership Development Committee. After completing this review, the Compensation and Leadership Development Committee did not recommend any amendments to the Board for fiscal 2017.

The Compensation and Leadership Development Committee also conducted an evaluation of its own performance that included an evaluation of its performance compared with the requirements of the charter of the Compensation and Leadership Development Committee. During fiscal 2017, the Compensation and Leadership Development Committee performed all of its duties and responsibilities under the Compensation and Leadership Development Committee’s charter. Additionally, as part of its responsibilities, the Compensation and Leadership Development Committee reviewed the section of this Proxy Statement entitled “Compensation Discussion and Analysis” (“CD&A”), as prepared by management of Verifone, and discussed the CD&A with the management of Verifone. Based on its review and discussions, the Compensation and Leadership Development Committee recommended to the Board of Directors that the CD&A be included in this Proxy Statement.

COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE Robert B. Henske, Chair Larry A. Klane Jonathan I. Schwartz Jane J. Thompson

54 2018 Proxy Statement REPORT OF THE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

The primary purposes of the Corporate Governance and Nominating Committee are to (i) identify individuals qualified to become members of the Board of Directors, (ii) develop and recommend to the Board standards to be applied in making determinations as to the absence of material relationships between Verifone and a director, (iii) develop and recommend to the Board a set of corporate governance principles and (iv) assist management in the preparation of disclosure in this Proxy Statement regarding the operations of the Corporate Governance and Nominating Committee.

The Board has determined, upon the recommendation of the Corporate Governance and Nominating Committee, that Mr. Alspaugh, Ms. Austin, Dr. Black, Mr. Hart, Mr. Henske, Mr. Raff (who resigned from our Board and Corporate Governance and Nominating Committee, effective December 19, 2017), Mr. Klane, Mr. Schwartz, Ms. Thompson and Mr. Trollope were “independent” within the meaning of the rules of the NYSE and the SEC. The Corporate Governance and Nominating Committee currently consists of Mr. Alspaugh, Mr. Hart, Mr. Henske and Ms. Thompson, as chair. The Board has determined that each member of the Corporate Governance and Nominating Committee is “independent” within the meaning of the rules of the NYSE and the SEC.

On an ongoing basis during 2017, the Corporate Governance and Nominating Committee evaluated potential candidates for positions on the Board and its committees and appointed three new members to the Board and its committees, in each case in accordance with the criteria set forth in Verifone’s Corporate Governance Guidelines. The Corporate Governance and Nominating Committee approved and recommended to the Board of Directors the ten director nominees currently standing for election at the Annual Meeting.

As part of its duties, in September 2017, the Corporate Governance and Nominating Committee reviewed the Corporate Governance and Nominating Committee’s charter and Verifone’s Corporate Governance Guidelines to determine whether any changes to the charter or the guidelines were deemed necessary or desirable by the Corporate Governance and Nominating Committee. After completing this review, the Corporate Governance and Nominating Committee recommended no amendments to the Board for fiscal 2017.

The Corporate Governance and Nominating Committee also conducted an evaluation of its own performance that included an evaluation of its performance compared with the requirements of the charter of the Corporate Governance and Nominating Committee. During fiscal 2017, the Corporate Governance and Nominating Committee performed all of its duties and responsibilities under the Corporate Governance and Nominating Committee Charter.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE Jane J. Thompson, Chair Robert W. Alspaugh Alex W. (Pete) Hart Robert B. Henske

2018 Proxy Statement 55 REPORT OF THE AUDIT COMMITTEE

The purpose of the Audit Committee of Verifone is to assist the Board of Directors in fulfilling its oversight responsibility to the stockholders, potential stockholders, the investment community, and others relating to: (i) the integrity of Verifone’s financial statements; (ii) Verifone’s compliance with legal and regulatory requirements; (iii) Verifone’s independent registered public accounting firm’s qualifications and independence; (iv) the performance of Verifone’s internal audit function and independent registered public accounting firm; (v) the retention of Verifone’s independent registered public accounting firm; and (vi) the preparation of this report.

The Board of Directors has determined, upon the recommendation of the Corporate Governance and Nominating Committee, that each member of the Audit Committee is “independent” within the meaning of the rules of the NYSE and the SEC. The Audit Committee currently consists of Mr. Alspaugh, as chair, Ms. Austin, Dr. Black and Mr. Trollope. The Board of Directors has designated Mr. Alspaugh as an “Audit Committee financial expert” within the meaning of applicable SEC rules.

As set forth in the Audit Committee charter, management is responsible for the preparation, presentation, and integrity of Verifone’s financial statements, for the appropriateness of the accounting principles and reporting policies that are used by Verifone and for implementing and maintaining internal control over financial reporting. The independent registered public accounting firm is responsible for auditing Verifone’s financial statements and for reviewing Verifone’s unaudited interim financial statements.

In fulfilling their responsibilities, it is recognized that members of the Audit Committee are not full-time employees of Verifone and are not, and do not represent themselves to be, performing the functions of auditors or accountants. As such, it is not the duty or responsibility of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards. Members of the Audit Committee necessarily rely on the information provided to them by management and the independent registered public accounting firm. Accordingly, the Audit Committee’s considerations and discussions referred to below do not assure that Verifone’s financial statements are prepared in accordance with generally accepted accounting principles or that Verifone’s auditors are in fact “independent.”

In the performance of its oversight function, the Audit Committee has considered and discussed the audited financial statements with management and the independent registered public accounting firm. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees” issued by the Public Company Accounting Oversight Board (“PCAOB”), which include, among other items, matters related to the conduct of the audit of the Company’s financial statements. In addition, the Audit Committee has discussed with the independent registered public accounting firm the auditors’ independence from Verifone and its management, including the matters in the written disclosures and letter required by applicable requirements of the PCAOB, a copy of which the Audit Committee has received. All non-audit services performed by the registered public accounting firm must be specifically pre-approved by the Audit Committee or the Chair thereof.

In reliance on the reviews and discussions referred to above, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee charter, the Audit Committee recommended to the Board the inclusion of the audited financial statements in Verifone’s Annual Report on Form 10-K for the fiscal year ended October 31, 2017, as filed with the Securities and Exchange Commission.

AUDIT COMMITTEE Robert W. Alspaugh, Chair Karen Austin Ronald Black Rowan Trollope

56 2018 Proxy Statement EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of October 31, 2017 regarding securities issued under our equity compensation plans that were in effect during fiscal 2017.

Number of Securities Number of Securities to be Issued Upon Weighted-Average Remaining Available Exercise of Outstanding Exercise Price of for Future Issuance Options, Warrants and Outstanding Options, Under Equity Plan Category Rights Warrants and Rights Compensation Plans Equity compensation plans approved by security holders(1) 6,419,041 $31.41(2) 13,042,823(3) Equity compensation plans not approved by security holders — — — Total 6,419,041 $31.41(2) 13,042,823(3)

(1) This reflects equity awards issued under the 2006 Equity Plan. This information also includes securities issuable pursuant to the Hypercom 2000 Broad-Based Stock Incentive Plan, Hypercom Non-Employee Director Plan, and Hypercom Long-Term Incentive Plan as a result of our acquisition of Hypercom Corporation on August 4, 2011. As of October 31, 2017, the 2006 Equity Plan is the only plan under which we make grants of equity awards. (2) The weighted-average exercise price does not include the effect of 4,367,945 RSUs outstanding as of October 31, 2017, as such awards do not include an exercise price. (3) Represents shares remaining available for future issuance under our 2006 Equity Plan as of October 31, 2017.

2006 Equity Plan Our 2006 Equity Plan is the only plan under which we currently grant equity awards. Our 2006 Equity Plan permits grants of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance share and share unit awards, dividend equivalent rights and other stock awards. Awards may be granted to our non-employee directors, executive officers, and employees and other individuals performing services for us. The 2006 Equity Plan provides that the maximum compensation that may be granted to a non-employee director in respect of any calendar year, solely in his or her capacity as a non-employee director, may not exceed $750,000, with the value of any equity-based award calculated based on the accounting grant date value for such award. The plan authorizes the issuance of an aggregate of 40,522,075 shares of our common stock. For purposes of determining the number of shares issuable under the 2006 Equity Plan, any shares granted as stock options or stock appreciation rights are counted as one share for each share so granted; any RSU awards granted prior to June 29, 2011 are counted as 1.75 shares for every RSU award granted; and any RSU awards granted on and after June 29, 2011 are counted as 2.00 shares for every RSU award granted. As of October 31, 2017, there were a total of 2,051,096 options outstanding at a weighted-average exercise price of $31.41 per share. As of October 31, 2017, there were 4,367,945 RSUs outstanding. For further information on our equity compensation plan, see Note 4, Employee Benefit Plans of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on December 18, 2017.

2018 Proxy Statement 57 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents information concerning the beneficial ownership of the shares of our common stock as of January 26, 2018 (the “Measurement Date”), by: • each person we know to be the beneficial owner of 5% or more of our outstanding shares of common stock; • each of the NEOs; • each current director; and • all of our current executive officers and directors as a group.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder. Percentage of beneficial ownership is based on 110,351,526 shares of common stock outstanding as of January 26, 2018. Shares of common stock subject to options that are currently exercisable or exercisable within 60 days of the Measurement Date, and shares of RSUs which are scheduled to be released within 60 days of the Measurement Date are considered outstanding and beneficially owned by the person holding the options or RSUs for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless indicated below, the address of each individual listed below is c/o VeriFone Systems, Inc., 88 W. Plumeria Drive, San Jose, California 95134.

Shares Beneficially Owned

Name and Address of Beneficial Owner Number Percent of Class BlackRock, Inc.(1) 11,691,347 10.6% The Vanguard Group Inc. (2) 8,629,785 7.8% Causeway Capital Management LLC (3) 7,158,059 6.5% Paul Galant(4) 719,017 * Vin D’Agostino(5) 58,414 * Albert Liu(6) 255,061 * Glen Robson 67,516 * Marc Rothman 164,494 * Robert W. Alspaugh(7) 41,500 * Karen Austin(8) 15,000 * Ronald Black — * Alex W. (Pete) Hart(9) 80,432 * Robert B. Henske(10) 60,000 * Larry A. Klane — * Jonathan I. Schwartz(11) 21,556 * Jane J. Thompson(12) 17,000 * Rowan Trollope — * All current directors and executive officers as a group (14 persons)** 1,499,990 1.4% * Less than 1%. ** Total includes shares beneficially owned by our current executive officers. (1) The address of BlackRock, Inc. (“BlackRock”) is 55 East 52nd Street, New York, NY 10022. BlackRock, along with certain of its subsidiaries, has the sole power to vote or direct the vote of 11,441,364 shares and the sole power to dispose or direct the disposition of 11,691,347 shares of common stock. This information is based solely upon a Schedule 13G/A filed by BlackRock on January 23, 2018 for beneficial ownership as of December 31, 2017.

58 2018 Proxy Statement (2) The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. The Vanguard Group, Inc. (“Vanguard”) has the sole power to dispose or direct the disposition of 8,558,361 shares of common stock. Vanguard has shared power to dispose or direct the disposition of 71,424 shares of common stock, sole power to vote or direct the vote of 64,880 shares of common stock and shared power to vote or to direct the vote of 12,500 shares of common stock. This information is based solely upon a Schedule 13G/A filed by Vanguard on February 10, 2017 for beneficial ownership as of December 31, 2016. (3) The address of Causeway Capital Management LLC is 11111 Santa Monica Blvd, 15th Floor, Los Angeles, California 90025. Causeway Capital Management LLC (“Causeway Capital”) has the sole power to dispose or direct the disposition of 7,158,059 shares of common stock and the sole power to vote or direct the vote of 2,693,828 shares of common stock. This information is based solely upon a Schedule 13G filed by Causeway Capital on February 14, 2017 for beneficial ownership as of December 31, 2016. (4) Beneficial ownership information includes 219,017 shares held by Mr. Galant directly. In addition, shares listed as beneficially owned by Mr. Galant include 500,000 shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. (5) Beneficial ownership information includes 19,202 shares held by Mr. D’Agostino directly. In addition, shares listed as beneficially owned by Mr. D’Agostino include 34,800 shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. The shares listed as beneficially owned by Mr. D’Agostino also include 4,412 RSUs that are subject to be released or will be released within 60 days after the Measurement Date. (6) Beneficial ownership information includes 152,461 shares held by Mr. Liu directly. In addition, shares listed as beneficially owned by Mr. Liu consist of 102,600 shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. (7) Beneficial ownership information includes 12,500 shares held by Mr. Alspaugh directly. In addition, 29,000 shares listed as beneficially owned by Mr. Alspaugh represent shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. Beneficial ownership information excludes 13,556 RSUs that are vested but for which the delivery date has been deferred. (8) Beneficial ownership information includes 4,000 shares held by Ms. Austin directly. In addition, 11,000 shares listed as beneficially owned by Ms. Austin represent shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. Beneficial ownership information excludes 15,397 RSUs that are vested but for which the delivery date has been deferred. (9) Beneficial ownership information includes 51,432 shares held by Mr. Hart directly. In addition, 29,000 shares listed as beneficially owned by Mr. Hart represent shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. (10) Beneficial ownership information includes 31,000 shares held by Mr. Henske directly. In addition, 29,000 shares listed as beneficially owned by Mr. Henske represent shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. Beneficial ownership information excludes 12,056 RSUs that are vested but for which the delivery date has been deferred. (11) Beneficial ownership information includes 10,556 shares held by Mr. Schwartz directly. In addition, 11,000 shares listed as beneficially owned by Mr. Schwartz represent shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. (12) Beneficial ownership information includes 4,500 shares held by Ms. Thompson directly. In addition, 12,500 shares listed as beneficially owned by Ms. Thompson represent shares issuable upon the exercise of options that are exercisable or will become exercisable within 60 days after the Measurement Date. Beneficial ownership information excludes 6,556 RSUs that are vested but for which the delivery date has been deferred.

2018 Proxy Statement 59 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We may occasionally enter into transactions with entities in which an executive officer, director, 5% or more beneficial owner of our common stock, or an immediate family member of these persons has a direct or indirect material interest. Our policy is that our Audit Committee reviews and approves each individual related party transaction exceeding $120,000 after a determination that these transactions were on terms that were reasonable and fair to us. For the fiscal year ended October 31, 2017 and through the date of this Proxy Statement we had no such transactions. Our Audit Committee also reviews and monitors on-going relationships with related parties to ensure they continue to be on terms that are reasonable and fair to us.

Indemnification and Employment Agreements As permitted by the Delaware General Corporation Law, we have adopted provisions in our amended and restated certificate of incorporation that authorize and require us to indemnify our executive officers and directors to the full extent permitted under Delaware law, subject to limited exceptions. We have also entered, and intend to continue to enter, into separate indemnification agreements with our directors and executive officers which may be broader than the specific indemnification provisions contained in Delaware law. Also, as described above in “Employment Arrangements with the NEOs” in the CD&A in this Proxy Statement, we have existing employment arrangements with our NEOs.

Equity Awards We have granted options to purchase our common stock and restricted stock awards and RSU awards that may be settled for shares of our common stock to our executive officers and non-employee directors. See “Compensation Discussion and Analysis,” “Executive Compensation” and “Director Compensation” in this Proxy Statement.

60 2018 Proxy Statement MATTERS SUBMITTED FOR VOTE

PROPOSAL 1: ELECTION OF DIRECTORS

The business and affairs of Verifone are managed under the direction of our Board of Directors (our “Board”). Our Board has responsibility for establishing broad corporate policies and for the overall performance of Verifone, rather than for day-to-day business operations. Our Board currently consists of ten members, with Mr. Alex W. (Pete) Hart serving as our non-executive Chair. Each director serves for a one-year term until the following annual meeting of stockholders, until his or her successor has been elected and qualified or until his or her earlier resignation or removal.

Our Board has nominated the following individuals to be elected to serve for a one year term until the next annual meeting of stockholders: Robert W. Alspaugh, Karen Austin, Ronald Black, Paul Galant, Alex W. (Pete) Hart, Robert B. Henske, Larry A. Klane, Jonathan I. Schwartz, Jane J. Thompson, and Rowan Trollope. All nominees have consented to stand for election at the 2018 Annual Meeting and to serve, if elected, as directors. Each director elected will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal. The proxy holders named on the proxy card intend to vote for the election of these ten nominees.

Our Board has selected these nominees on the recommendation of our Corporate Governance and Nominating Committee. As summarized in the table below and discussed under “Director Independence and Corporate Governance—Corporate Governance and Nominating Committee” above, our Corporate Governance and Nominating Committee considers a number of important factors in director candidates, including large- company CEO experience, senior management experience in the payments industry, and executive level experience relevant to our key strategic initiatives. We value work ethic, leadership, problem-solving skills and diversity in selecting nominees to serve on our Board. If at the time of the meeting one or more of the nominees have become unable to serve, shares represented by proxies will be voted for the remaining nominees and for any substitute nominee or nominees designated by our Corporate Governance and Nominating Committee. Our Corporate Governance and Nominating Committee knows of no reason why any of the nominees will be unable to serve.

Our directors have a diversity of experience that spans a broad range of industries and in the public and private sectors. They bring to our Board a wide variety of skills, qualifications and viewpoints that strengthen the Board’s ability to carry out its oversight role on behalf of our stockholders. In the director biographies under “Our Board of Directors—Biographical Information Regarding Our Director Nominees” above, we describe certain areas of individual expertise that each director brings to our Board.

2018 Proxy Statement 61 The table below summarizes what our Board believes are desirable types of experience, qualifications, attributes and skills possessed by one or more of our directors, because of their particular relevance to our business and structure. While all of these were considered by the Board in connection with this year’s director nomination process, the following table does not encompass all experience, qualifications, attributes or skills of our directors and the fact that a particular experience, qualification attribute, or skill is not listed does not mean that a director does not possess it. lspaugh Alex W. (Pete) Hart Jane J. Thompson A Robert. W. Paul Galant Rowan Trollope Karen Austin Ronald Black Larry A. Klane Jonathan I. Schwartz Director Experiences, Qualifications, Attributes and Skills Robert B. Henske

BOARD COMMITTEES(1) Audit C X X X Compensation and Leadership Development C X X X Corporate Governance & Nominating X X X C COMPLIANCE ISSUES Independent Director X X X X X X X X X Financial Expert X X X KEY COMPETENCIES Current/Recent Public Company CEO X X X X Global X X X X X X X X Financial Services X X X X X X X X Payments X X X X X Retail X X X Manufacturing / Operations X X X X X X X M&A X X X X X X X X X Strategy Development X X X X X X X X X X Finance X X X X X Technology / Product Development X X X X X X Marketing X X X X X X X X Sales X X X X X X X X X X Human Resources X X X X Other Public Company Board Experience X X X X X X X PERSONAL Gender / Ethnic Diversity X X Age 50 70 56 54 77 56 57 52 66 45 Current Operating Role X X X X X X (1) The chair of each committee is identified with “C”.

Vote Required Each nominee receiving the vote of the majority of the votes cast (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee) will be elected. Our Corporate Governance and Nominating Committee and Board will review any resignation tendered as a result of a nominee not receiving a vote of the majority of the votes cast for election. See “Our Board of Directors—Majority Voting Provision” above.

Directors’ Recommendation Our Board of Directors unanimously recommends a vote “FOR” the election of each of Robert W. Alspaugh, Karen Austin, Ronald Black, Paul Galant, Alex W. (Pete) Hart, Robert B. Henske, Larry A. Klane, Jonathan I. Schwartz, Jane J. Thompson and Rowan Trollope to our Board of Directors.

Paul Galant Robert. W. Alspaugh Karen Austin Ronald Black Alex W. (Pete) Hart Robert B. Henske Larry A. Klane Jonathan I. Schwartz Jane J. Thompson Rowan Trollope

62 2018 Proxy Statement PROPOSAL 2: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Executive compensation is an important matter for us and our stockholders. We place significant value on stockholder feedback. In this Proposal 2, we provide our stockholders with the opportunity to cast a non-binding, advisory vote to approve the compensation of our NEOs as disclosed in the Compensation Discussion & Analysis and related compensation tables included in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” proposal, is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies, and practices described in this Proxy Statement. The Say-on-Pay vote is advisory only, and therefore is not binding on our Board or our Compensation and Leadership Development Committee. However, our Board and our Compensation and Leadership Development Committee strongly value the opinions of our stockholders and since 2013 have made substantial modifications to our executive compensation program specifically to address concerns raised by stockholders in the past, continue to maintain open communications with our stockholders and monitor the policies of the major proxy advisory firms, and will take into account the outcome of this vote in considering future compensation arrangements.

Our executive compensation program is based on a “pay-for-performance” philosophy. We design our executive compensation program to compensate our NEOs for performance that furthers our business strategy and initiatives, competitive performance, sound corporate governance principles and stockholder value and return. As described in the Compensation Discussion & Analysis included in this Proxy Statement, since fiscal 2013 we have made a number of substantial modifications to our executive compensation program, adopting specific modifications to address concerns raised by our stockholders. In determining the best way for us to address stockholder concerns about our executive compensation program and to continue to prioritize stockholder value creation, our Compensation and Leadership Development Committee carefully considered each concern raised in our conversations and exchanges with representative stockholders, the policies of the major proxy advisory firms and the views of its compensation consultant, our long-term growth strategy and the potential impact of any proposed modification on our ability to attract, motivate and retain executive talent.

We seek to align our NEOs’ incentive compensation opportunities to the achievement of short-term and long- term performance objectives that are directly aligned with the interests of our stockholders. During fiscal 2017, our NEOs focused substantial time and energy on our transformation initiatives to bolster our long-term profitability and operational excellence. While we believe that their efforts have not been fully reflected in our TSR to date, our Board is confident in Mr. Galant and the management team’s leadership and efforts thus far. We believe that our overall executive compensation program and policies effectively incentivize our NEOs to meet or exceed our performance objectives.

We seek your vote in support of our executive compensation program, particularly in light of the substantial modifications that we made to our program in response to stockholder feedback from 2013-2017, as described in our Compensation Discussion & Analysis included in this Proxy Statement and highlighted below: • No adjustment to NEO base salaries for fiscal 2017. No adjustments were made to the base salaries of our NEOs for fiscal 2017. • Reduced short-term incentive payouts for fiscal 2017. Short-term incentive award payouts to our NEOs for fiscal 2017 were paid at only 67% of their target short-term incentive compensation opportunity due to our fiscal 2017 financial performance. • Half of annual long-term incentive awards granted in the form of performance-based equity awards. Generally half of the value of the equity awards granted to our NEOs in fiscal 2017 was in the form of performance-based awards, with the remainder being time-based awards subject to a four-year vesting requirement. This is consistent with our practice in recent years and was adopted by our Board and Compensation and Leadership Development Committee as a formal policy for future awards. • Performance-based equity awards measured using TSR over a three-year performance period. The performance-based equity award granted to our NEOs in fiscal 2017 will be earned, if at all, based on our TSR over a three-year performance period from January 3, 2017 through January 3, 2020, relative to the S&P North American Technology Index, with the number of shares of our common stock earned to be determined based on our actual percentile achievement on a stack-ranked basis. This provides opportunity for above-median achievement for performance above target, downward adjusted payout for below median achievement and a required minimum level of achievement for any payout to be made.

2018 Proxy Statement 63 We believe that the features described above effectively supplement the ongoing executive compensation- related policies and practices that we follow to ensure promotion of stockholder interests and strong corporate governance. These practices include: • our policy that prohibits hedging of, or hedging against losses of, Verifone securities; • our “clawback” policy; • our objective formula-based peer group selection process; • our robust executive stock ownership guidelines; • provisions in our 2006 Equity Plan that prohibit any repricing of stock options without stockholder approval; and • the “double-trigger” arrangements in our change in control severance provisions for our NEOs.

We would also like to highlight our strong TSR performance for fiscal 2017, which was in line with the fiscal 2017 2540 Global Industry Classification Standards median TSR of 26.2% and the fiscal 2017 S&P MidCap 400 Index TSR of 23.0%.

In addition, we do not provide material perquisites or any excise tax gross-ups to our NEOs. Our Compensation and Leadership Development Committee retains an independent compensation consultant that advises our Compensation and Leadership Development Committee on a regular basis, and our stockholders have direct lines of communications to our Board and Compensation and Leadership Development Committee. We also value stockholder input on our executive compensation program, and conduct an annual stockholder advisory vote on the compensation of our NEOs.

Our executive compensation program and the significant modifications made since fiscal 2013 are described more fully in the Compensation Discussion & Analysis included in this Proxy Statement, and we invite you to read this important information in connection with your vote on this Proposal 2.

Pursuant to Section 14A of the Exchange Act, we are asking our stockholders to indicate their approval of the compensation of our NEOs as described in the Compensation Discussion & Analysis and related compensation tables included in this Proxy Statement.

Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the NEOs, as disclosed in the Company’s Proxy Statement for the 2018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Fiscal 2017 Summary Compensation Table, and the other related tables and disclosure included in such Proxy Statement.”

Vote Required Approval of Proposal 2 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.

Directors’ Recommendation Our Board of Directors unanimously recommends a vote “FOR” the advisory vote to approve the compensation of our NEOs.

64 2018 Proxy Statement PROPOSAL 3RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our Audit Committee of our Board of Directors has selected and appointed Ernst & Young LLP as the independent registered public accounting firm to audit the consolidated financial statements of Verifone and its subsidiaries for the fiscal year ending October 31, 2018. Ernst & Young LLP has been our independent auditor since 2002, and Ernst & Young LLP audited the financial statements for us for the fiscal year ended October 31, 2017. The Audit Committee periodically considers whether there should be a rotation of independent registered public accounting firms because the Audit Committee believes it is important for the registered public accounting firm to maintain independence and objectivity. In determining whether to reappoint Ernst & Young LLP as Verifone’s independent auditor, the Audit Committee considered a number of factors, including the length of time the firm has served in this role, the firm’s independence and objectivity, the firm’s professional qualifications and resources, the firm’s past performance, and the firm’s capabilities in handling the breadth and complexity of our business, as well as the potential impact of changing independent auditors.

The Board and the Audit Committee believe that the continued retention of Ernst & Young LLP as Verifone’s independent auditor is in the best interests of Verifone and its stockholders. Although stockholder ratification of the appointment of our independent registered public accounting firm is not required by our bylaws or otherwise, we are submitting the selection of Ernst & Young LLP to our stockholders for ratification as a matter of good corporate governance practice. Even if the selection is ratified, our Audit Committee in its discretion may select a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of Verifone and its stockholders. If our stockholders do not ratify our Audit Committee’s selection, our Audit Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its selection of our independent registered public accounting firm.

A representative of Ernst & Young LLP will be present at the annual meeting, will have an opportunity to make a statement, if so desired, and will be available to respond to appropriate questions.

Fees for Services Provided by Independent Registered Public Accounting Firm The following table sets forth fees incurred by us and our subsidiaries for services provided by Ernst & Young LLP, our independent registered public accounting firm, for the fiscal years ended October 31, 2017 and 2016 (in thousands):

2017 2016 Audit fees $6,160 $6,896 Audit-related fees —— Tax fees 263 515 All other fees 32 Total fees $6,426 $7,414

Audit Fees. This category consists of professional services provided by Ernst & Young LLP in connection with the integrated audit of the Company’s financial statements including services provided in connection with the annual audit of the Company’s internal control over financial reporting and review of the Company’s quarterly financial statements. The fees also include professional services provided for statutory audits of subsidiaries or affiliates of the Company.

Audit-Related Fees. This category consists of assurance and related services provided by Ernst & Young LLP that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees under this category primarily include employee benefit plan audits, due diligence related to acquisitions and consultations concerning financial accounting and reporting standards that are not part of the performance of the audit or review of our financial statements.

Tax Fees. This category consists of professional services rendered by Ernst & Young LLP, primarily in connection with our tax compliance activities, including the preparation of tax returns in certain overseas jurisdictions, consultation on tax matters, tax advice relating to transactions and other tax planning and advice.

2018 Proxy Statement 65 All Other Fees. This category consists of fees for products and services other than the services reported above.

For fiscal years 2017 and 2016 all fees incurred by us and our subsidiaries for services provided by Ernst & Young LLP were pre-approved by our Audit Committee.

Audit Committee Pre-Approval Policies and Procedures As required by Section 10A(i)(1) of the Exchange Act, our Audit Committee has adopted a pre-approval policy requiring that our Audit Committee pre-approve all audit and permissible non-audit services to be performed by Ernst & Young LLP. Any proposed service that has received pre-approval but which will exceed pre-approved cost limits will require additional approval by our Audit Committee. In addition, pursuant to Section 10A(i)(3) of the Exchange Act, our Audit Committee has established procedures by which our Audit Committee may from time to time delegate pre-approval authority to the Chair of the Audit Committee. If the Chair exercises this authority, he or she must report any pre-approval decisions to the full Audit Committee at its next meeting.

Vote Required Approval of Proposal 3 requires the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.

Directors’ Recommendation Our Board of Directors unanimously recommends a vote “FOR” ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm to audit the consolidated financial statements of Verifone and its subsidiaries for the fiscal year ending October 31, 2018. Unless a contrary choice is specified, proxies solicited by our Board of Directors will be voted “FOR” ratification of the appointment.

66 2018 Proxy Statement OTHER MATTERS

Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires Verifone’s executive officers, directors and persons who own more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. The officers, directors and 10% stockholders are required by SEC regulations to furnish Verifone with copies of all Section 16(a) forms they file. SEC regulations require us to identify in our Annual Report on Form 10-K anyone who failed to file, on a timely basis, reports that were due during the most recent fiscal year or, in certain cases, prior years. Based on our review of reports we received, or written representations from reporting persons stating that they were not required to file these forms, we believe that, during our fiscal year ended October 31, 2017, all Section 16(a) filing requirements were satisfied on a timely basis.

Compensation and Leadership Development Committee Interlocks and Insider Participation For fiscal 2017, our Compensation and Leadership Development Committee consisted of Robert B. Henske (Chair), Jonathan I. Schwartz and Jane J. Thompson. None of the members of our Compensation and Leadership Development Committee is or was one of our officers or employees during the last fiscal year or was formerly one of our officers, and none of our executive officers serves as a member of a board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation and Leadership Development Committee.

Incorporation by Reference To the extent that this Proxy Statement is incorporated by reference into any other filing by Verifone under the Securities Act of 1933 or the Exchange Act, the sections of this Proxy Statement entitled “Report of the Compensation and Leadership Development Committee,” “Report of the Corporate Governance and Nominating Committee” and “Report of the Audit Committee” (to the extent permitted by the rules of the SEC) will not be deemed incorporated and are not considered “soliciting” material.

Householding The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement or Notice of Internet Availability of Proxy Materials addressed to those stockholders. This practice, known as “householding,” is designed to reduce the volume of duplicate information and reduce printing and postage costs.

If you and others who share your mailing address own our common stock in street name, meaning through bank or brokerage accounts, you may have received a notice that your household will receive only one annual report and proxy statement or Notice of Internet Availability of Proxy Materials from each company whose stock is held in such accounts. Unless you responded that you did not want to participate in householding, you were deemed to have consented to it and a single copy of our proxy statement and annual report or Notice of Internet Availability of Proxy Materials has been sent to your address.

We will promptly deliver separate copies of our proxy statement and annual report or Notice of Internet Availability of Proxy Materials at the request of any stockholder who is in a household that participates in the householding of our proxy materials. You may send your request by mail to our Investor Relations department at VeriFone Systems, Inc., 88 W. Plumeria Drive, San Jose, CA 95134 or by telephone at (408) 232-7800. If you currently receive multiple copies of Verifone’s proxy materials and would like to participate in householding, please contact our Investor Relations department at the address or phone number described above.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on March 22, 2018 You may obtain, free of charge, a copy of our Annual Report, this Proxy Statement, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, our director and officer stock ownership guidelines, and the charters for our Audit, Compensation and Leadership Development, and Corporate

2018 Proxy Statement 67 Governance and Nominating Committees, by writing to: VeriFone Systems, Inc., 88 W. Plumeria Drive, San Jose, California 95134, Attn: Investor Relations. Our Annual Report, this Proxy Statement, and the other documents mentioned in this paragraph are available on our website at http://ir.verifone.com. For directions to the Annual Meeting, please contact our Investor Relations department at (408) 232-7800.

Other Matters Our Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.

By Order of the Board of Directors,

Paul Galant Chief Executive Officer

San Jose, California Dated: February 8, 2018

68 2018 Proxy Statement APPENDIX A

RECONCILIATION OF NON-GAAP FINANCIAL PERFORMANCE MEASURES TO GAAP FINANCIAL PERFORMANCE MEASURES

This proxy statement includes several non-GAAP financial measures, including non-GAAP net revenues; non-GAAP net income; non-GAAP net income per diluted share; and free cash flow. The corresponding reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures are included below.

Management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. Management believes that these non-GAAP financial measures help it to evaluate Verifone’s performance and operations and to compare Verifone’s current results with those for prior periods as well as with the results of peer companies. Verifone incurs, due to differences in debt, capital structure and investment history, geographic presence and associated currency impacts, certain income and expense items, such as stock based compensation, amortization of acquired intangibles and other non-cash expenses, that differ significantly from Verifone’s competitors. The non-GAAP financial measures reflect Verifone’s reported operating performance without such items. Management also uses these non-GAAP financial measures in Verifone’s budget and planning process. Management believes that the presentation of these non-GAAP financial measures is useful to investors in comparing Verifone’s operating performance in any period with its performance in other periods and with the performance of other companies that represent alternative investment opportunities. These non-GAAP financial measures contain limitations and should be considered as a supplement to, and not as a substitute for, or superior to, disclosures made in accordance with GAAP.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and may therefore differ from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures do not reflect all amounts and costs, such as acquisition related costs, employee stock-based compensation costs, cash that may be expended for future capital expenditures or contractual commitments, working capital needs, cash used to service interest or principal payments on Verifone’s debt, income taxes and the related cash requirements, and restructuring charges, associated with Verifone’s results of operations as determined in accordance with GAAP.

Furthermore, Verifone expects to continue to incur income and expense items that are similar to those that are excluded by the non-GAAP adjustments described herein. Management compensates for these limitations by also relying on the comparable GAAP financial measures.

A reconciliation of non-GAAP net revenues to GAAP net revenues for fiscal 2016 and 2017 (in millions):

Note Fiscal 2016 Fiscal 2017 Non-GAAP net revenues $2,006.1 $1,874.0 Amortization of step-down in deferred services net revenues at acquisition A (14.0) (3.0) GAAP net revenues $1,992.1 $1,871.0

A reconciliation of non-GAAP services net revenues to GAAP services net revenues for fiscal 2017 (in millions):

Note Fiscal 2017 Non-GAAP services net revenues $788.5 Amortization of step-down in deferred services net revenues at acquisition A (3.0) GAAP services net revenues $785.5

2018 Proxy Statement A-1 Non-GAAP new product net revenues for fiscal 2017 (in millions):

Note Fiscal 2017 Non-GAAP new product net revenues G $37.5

A reconciliation of non-GAAP net income to GAAP net loss, weighted-average number of shares used in computing diluted net income (loss) per share to weighted-average number of shares used in computing GAAP diluted net income (loss) per share, as well as non-GAAP net income per diluted share (“non-GAAP EPS”) to GAAP net income per diluted share (“GAAP EPS”), for fiscal 2016 and 2017 (in millions, except per share numbers):

Note Fiscal 2016 Fiscal 2017 Non-GAAP net income(1) $ 185.0 $ 147.2 Amortization of step-down in deferred services net revenues at acquisition and associated costs of goods sold A (9.9) (2.4) Amortization of purchased intangible assets B (105.7) (77.6) Other merger and acquisition related expenses B 9.0 (1.3) Stock based compensation C (42.3) (39.9) Goodwill Impairment D 0.0 (17.4) Restructure and related charges D (46.3) (168.9) Other charges and income D (19.4) (6.5) Income tax effect of non-GAAP exclusions E 20.3 (7.1) GAAP net loss(1) $ (9.3) $(173.9)

Note Fiscal 2016 Fiscal 2017 Non-GAAP 111.6 112.2 Adjustment for diluted shares H (0.8) (0.7) GAAP 110.8 112.5

Fiscal 2016(2) Fiscal 2017(2) Non-GAAP EPS $ 1.66 $ 1.31 GAAP EPS $(0.08) $(1.55) (1) Referred to as “Non-GAAP net income (loss) per share attributable to VeriFone Systems, Inc. stockholders” and “GAAP net income (loss) per share attributable to VeriFone Systems, Inc. stockholders,” respectively, in reports of our financial results on Form 8-K. (2) For fiscal year 2016 and fiscal 2017, we had net income on a non-GAAP basis and a net loss on a GAAP basis. Therefore, the weighted-average number of shares used in computing non-GAAP EPS includes shares that are anti-dilutive and excluded from the computation of GAAP EPS.

A reconciliation of free cash flow to GAAP net cash provided by operating activities for fiscal 2016 and 2017 (in millions):

Note Fiscal 2016 Fiscal 2017 Free cash flow $ 92.1 $ 98.6 GAAP capital expenditures F 105.3 67.3 GAAP net cash provided by operating activities $197.4 $165.9

A-2 2018 Proxy Statement NON-GAAP FINANCIAL MEASURES NOTES Note A: Non-GAAP Net Revenues and Services Net Revenues. Non-GAAP net revenues exclude the fair value decrease (step-down) in deferred revenue at acquisition. Non-GAAP services net revenues exclude the fair value decrease (step-down) in deferred revenue at acquisition. Although the step-down of deferred revenue fair value at acquisition is reflected in our GAAP financial statements, it results in net revenues and services net revenues immediately post-acquisition that are lower than net revenues and services net revenues that would be recognized in accordance with GAAP on those same services if they were sold under contracts entered into post- acquisition. Accordingly, we adjust the step-down to achieve comparability between net revenues and services net revenues of the acquired entity earned pre-acquisition and our GAAP net revenues and services net revenues to be earned on contracts sold in future periods. These adjustments, which relate principally to our acquisition of AJB during February 2016, enhance the ability of our management and our investors to assess our financial performance and trends. These non-GAAP net revenues and services net revenues are not intended to be a substitute for our GAAP disclosures of net revenues and services net revenues and should be read together with our GAAP disclosures.

Note B: Merger and Acquisition Related. Verifone adjusts certain revenues and expenses for items that are the result of mergers and acquisitions. Merger and acquisition related adjustments include the amortization of intangible assets, contingent consideration fair market value adjustments, interest on contingent consideration, transaction expenses associated with acquisitions, and acquisition integration expenses. Amortization of intangible assets: Verifone incurs amortization of intangible assets in connection with its acquisitions, such as amortization of finite lived customer relationships intangibles. We are required to allocate a portion of the purchase price of each business acquisition to the intangible assets acquired and to amortize this amount over the estimated useful lives of those acquired intangible assets. Because these amounts have no direct correlation to Verifone’s underlying business operations, we eliminate these amortization charges and any associated minority interest impact from our non-GAAP operating results to provide better comparability of pre-acquisition and post-acquisition operating results. Contingent consideration fair market value adjustments and interest on contingent consideration: In connection with its acquisitions, Verifone owes contingent consideration payments based upon the post- acquisition performance of and other factors related to acquired businesses. These contingent consideration liabilities are reported at fair market value and incur non-cash imputed interest. Changes in the fair market value of contingent consideration and imputed interest expense vary independent of our ongoing operating results and have no direct correlation to our underlying business operations. Accordingly, Verifone excludes these amounts from our non-GAAP operating results to provide better comparability of pre-acquisition and post-acquisition operating results. Transaction expenses associated with acquisitions: Verifone incurs transaction expenses in connection with its acquisitions, which include legal and other professional fees such as advisory, accounting, valuation and consulting fees. These transaction expenses are related to acquisitions and have no direct correlation with the ongoing operation of Verifone’s business. Accordingly, Verifone excludes these amounts from our non-GAAP operating results to provide better comparability of pre-acquisition and post-acquisition operating results. Acquisition integration expenses: In connection with its acquisitions, Verifone incurs costs relating to the integration of the acquired business with Verifone’s ongoing business, which includes expenses relating to the integration of facilities and other infrastructure, information technology systems and employee-related costs such as costs of personnel required to assist with integration transitions. These acquisition integration expenses are related to acquisitions and have no direct correlation with the ongoing operation of Verifone’s business. Accordingly, Verifone excludes these amounts from our non-GAAP operating results to provide better comparability of pre-acquisition and post-acquisition operating results.

Note C: Stock-Based Compensation. Our non-GAAP financial measures eliminate the effect of expense for stock-based compensation because they are non-cash expenses and because of varying available valuation methodologies, subjective assumptions and the variety of award types which affect the calculations of stock- based compensation, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to our peer companies. Stock-based compensation is very different from other forms of compensation. A cash salary or bonus has a fixed and unvarying cash cost. In contrast the expense associated with a stock based award is unrelated to the amount of compensation ultimately received by

2018 Proxy Statement A-3 the employee; and the cost to the Company is based on valuation methodology and underlying assumptions that may vary over time and does not reflect any cash expenditure by the Company. Furthermore, the expense associated with granting an employee a stock based award can be spread over multiple years and may be reversed based on forfeitures which may differ from our original assumptions unlike cash compensation expense which is typically recorded contemporaneously with the time of award or payment. Accordingly, we believe that excluding stock-based compensation expense from our non-GAAP operating results facilitates better understanding of our long-term business performance and enhances period-to-period comparability.

Note D: Other Charges and Income. Verifone excludes certain expenses, other income (expense) and gains (losses) that we have determined are not reflective of ongoing operating results or that vary independent of business performance. It is difficult to estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, we exclude them in our non-GAAP financial measures because we believe these items limit the comparability of our ongoing operations with prior and future periods. These adjustments for other charges and income include: Transformation and Restructuring: Over the past several years, we have had gains and incurred expenses, such as professional services, contract cancellation fees and certain personnel costs related to initiatives to transform, streamline, centralize and restructure our global operations. The transformation gain relates to the contribution of certain business assets and associated equity ownership in Gas Media. Charges include involuntary termination costs, costs to cancel facility leases, write down of assets held for sale, and associated legal and other advisory fees. Each of these items has been incurred in connection with discrete activities in furtherance of specific business objectives in light of prevailing circumstances, and each item and the associated activity or activities have had differing impacts on our business operations. We do not recognize gains or incur costs of this nature in the ordinary course of business. While certain of these items have recurred in recent years and may continue to recur in the near future, the amount of these items has varied significantly from period to period. Accordingly, management assesses our operating performance with these amounts included and excluded, and we believe that by providing this information, users of our financial statements are better able to understand the financial results of what we consider to be our continuing operations and compare our current operating performance to our past operating performance. Foreign exchange losses related to obligations denominated in currencies of highly inflationary economies: Our non-GAAP operating results do not include foreign exchange losses related to obligations denominated in highly inflationary economies, such as the devaluation of the Argentina Peso during the first quarter of fiscal year 2016. We believe that excluding such losses provides a better indication of our business performance, as the existence of high inflation in these economies varies independent of our business performance, and enhances the comparability of our business performance during periods before and after such inflation occurred. Goodwill Impairment: Our non-GAAP results exclude any goodwill impairment. We believe that excluding goodwill impairments provides a better indication of our business performance and enhances the comparability of our business performance during periods before and after we recorded the impairment.

Note E: Income Tax Effect of Non-GAAP Exclusions. Income taxes are adjusted for the tax effect of the adjusting items related to our non-GAAP financial measures and to reflect our best estimate of taxes on a non-GAAP basis, in order to provide our management and users of the financial statements with better clarity regarding the on-going comparable performance. For the purpose of computing the income tax effect of non-GAAP exclusions, we used a 14.5% rate.

Note F: Free Cash Flow. Verifone determines free cash flow as net cash provided by operating activities less capital expenditures.

Note G: Non-GAAP New Product Net Revenues. Verifone determines new product net revenues based on the revenues received from newly introduced products that have shipped during the fiscal year.

Note H: Non-GAAP Diluted Shares. Diluted GAAP and non-GAAP weighted-average shares outstanding are the same in all periods, except when there is a GAAP net loss. In accordance with GAAP, we do not consider dilutive shares in periods with a net loss. However, in periods when we have non-GAAP net income and GAAP basis net loss, diluted non-GAAP weighted-average shares include additional shares that are dilutive for non-GAAP computations of earnings per share.

A-4 2018 Proxy Statement UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 2017 OR ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-32465 VERIFONE SYSTEMS, INC. (Exact name of Registrant as Specified in its Charter) DELAWARE 04-3692546 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 88 West Plumeria Drive, 95134 San Jose, CA (Zip Code) (Address of Principal Executive Offices) (408) 232-7800 (Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $0.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Í No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Í No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. Í Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Í Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No Í As of April 30, 2017, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately $1.4 billion based on the closing sale price as reported on the New York Stock Exchange. The number of shares outstanding of each of the issuer’s classes of common stock, as of the close of business on November 30, 2017: Class Number of shares Common Stock, $0.01 par value per share ...... 112,378,176 DOCUMENTS INCORPORATED BY REFERENCE As noted herein, the information called for by Part III is incorporated by reference to specified portions of the Registrant’s definitive proxy statement to be filed in conjunction with the Registrant’s 2017 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the Registrant’s fiscal year ended October 31, 2017. VERIFONE SYSTEMS, INC. 2017 ANNUAL REPORT ON FORM 10-K

INDEX

PART I Item 1. Business ...... 4 Item 1A. Risk Factors ...... 17 Item 1B. Unresolved Staff Comments ...... 44 Item 2. Properties ...... 44 Item 3. Legal Proceedings ...... 45 Item 4. Mine Safety Disclosures ...... 45 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...... 46 Item 6. Selected Financial Data ...... 48 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 49 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...... 68 Item 8. Financial Statements and Supplementary Data ...... 70 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..... 120 Item 9A. Controls and Procedures ...... 120 Item 9B. Other Information ...... 121 PART III Item 10. Directors, Executive Officers and Corporate Governance ...... 121 Item 11. Executive Compensation ...... 121 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...... 121 Item 13. Certain Relationships and Related Transactions, and Director Independence ...... 121 Item 14. Principal Accountant Fees and Services ...... 121 Item 15. Exhibits and Financial Statement Schedules ...... 121 Signatures ...... 124

2 2017 10-K FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K and certain information incorporated by reference herein contain forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements relate to future events or our future financial performance based on certain assumptions. In some cases, you can identify forward-looking statements by words such as “may,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms, or comparable terminology. Actual events or results may differ materially from those expressed or implied in these forward-looking statements.

Forward-looking statements are not guarantees of future results, events, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In evaluating these statements, you should specifically consider various factors, including the risks outlined in Item 1A, Risk Factors, in this Annual Report on Form 10-K, and elsewhere in this report, including our disclosures of Critical Accounting Policies and Estimates in Item 7, our disclosures in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, as well as in our Consolidated Financial Statements and related notes. We are under no duty to update any of the forward-looking statements after the date of this Annual Report on Form 10-K to conform such statements to actual results or to changes in expectations. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

In this Annual Report on Form 10-K, each of the terms “Verifone,” “Company,” “us,” “we,” and “our” refers to VeriFone Systems, Inc. and its consolidated subsidiaries.

2017 10-K 3 PART I

ITEM 1. BUSINESS Our Company Verifone is a global leader in payments and commerce solutions at the point of sale (“POS”). For over 35 years, we have designed, manufactured, marketed and supplied a broad range of innovative payment solutions and complementary services. Our solutions enable merchants and the institutions that serve them to securely accept electronic forms of payment and ensure regulatory and industry standards compliance; enable value- added exchange between merchants and consumers; and enhance payment security. Key industries in which we operate include financial services, retail, petroleum, restaurant, hospitality, transportation, and healthcare.

VeriFone, Inc., our principal operating subsidiary, was incorporated in 1981. Shortly afterward, we introduced the first check verification and credit authorization device utilized by merchants in a commercial setting. In 1984, we introduced the first mass market electronic payment system intended to replace manual credit card authorization devices for small merchants. VeriFone, Inc. operated as a publicly-traded company from 1990 until it was acquired in 1997 by Hewlett-Packard, which operated it as a division. In July 2001, HP sold VeriFone, Inc. to Gores Technology Group, LLC, a privately held acquisition and investment management firm. In July 2002, VeriFone, Inc. was recapitalized and VeriFone Systems, Inc. (formerly known as VeriFone Holdings, Inc.), a Delaware corporation, was organized as a holding company for VeriFone, Inc. In connection with the recapitalization, certain investment funds affiliated with GTCR Golder Rauner, LLC, a private equity firm, became our majority stockholders. VeriFone completed its initial public offering on May 4, 2005. In June 2009, the GTCR- affiliated funds ceased to be beneficial owners of 5% or more of our outstanding common stock.

Our business has grown through a combination of organic growth and strategic acquisitions. For instance, in December 2015, we acquired InterCard AG, a leading payment service provider in Germany, and in February 2016, we acquired AJB Software Design, a provider of payment gateway and switching solutions for large merchants in the U.S. and Canada.

We are headquartered in San Jose, California and sell into more than 150 countries worldwide, with a direct presence in approximately 40 countries.

Our Business Strategy Verifone’s strategy is to deliver payment solutions that combine next-generation devices that are connected to our services network to enable the future of payments and commerce. We seek to provide innovative payment and value-added commerce solutions globally to merchants and the institutions that serve them, such as financial institutions, merchant acquirers and point-of-sale integrators, on a worldwide basis. Our solutions enable payment and commerce in a variety of environments, including traditional multilane and countertop implementations, self- service or unattended environments, portable deployments, mobile point-of-sale solutions, as well as fully integrated point of sale solutions. Our solutions include electronic payment devices; field services such as installation, repair and warranty; and software such as estate management, security and gateway services. We recently introduced Verifone Engage, our new family of interactive, commerce-enabled payment devices that we believe offer a new and innovative connected payments experience. We have also recently launched Verifone Carbon 8 and 10, an integrated dual-screen cloud-based point-of-sale solution, that enables merchants to run register and business applications from a tablet-sized screen while enabling consumers to pay and interact with a smaller consumer-facing screen. We believe we have one of the leading electronic payment solutions brands and are one of the largest providers of electronic payment and commerce solutions worldwide.

Services continue to be important to our business strategy. During fiscal year 2018, we intend to expand our footprint of connected network endpoints and extend the payment and commerce services into additional devices. In order to provide a broader range of services as part of our solutions, we also seek to connect our terminal systems back to our network, which enables us to leverage a connected network of terminals in our services offerings. We offer a wide portfolio of services, ranging from traditional terminal- related support services and value-added transaction payment services to commerce enablement solutions that are designed to facilitate commerce opportunities for merchants. Our traditional terminal-related support services include professional services related to installation and deployment, helpdesk support, training, equipment repair and maintenance,

4 2017 10-K and software post-contract support. Our value-added transaction services include terminal management services and gateway solutions that enable more efficient routing of transactions, multi-channel acceptance and processing, along with end-to-end encryption to reduce the complexity and costs of Payment Card Industry, or PCI, standards compliance. Our commerce enablement solutions leverage our terminals to engage consumers at the point of sale through value-added applications such as loyalty and couponing applications, targeted offers and real-time reward redemptions. We believe that consumer engagement at the point of sale provides opportunities to increase brand awareness and potential for merchants to grow sales. We intend to provide applications to merchants who have connected to our gateways that improve the efficiency in the way that they run their businesses. We also intend to launch a commerce enablement platform that links smart terminals and technology gateways in order to provide our clients with integrated tools to enhance and enrich the commerce experience at the point of sale, as well as improve their back office efficiency.

We believe continued innovation in terminal solutions, strategic expansion of our value-added services in key markets, including both developed and emerging markets, and investment in our payments and commerce enablement solutions are important components of our business strategy. We intend to focus on our solutions as a key driver of growth globally, including emphasis on growing the number of devices connected to our gateways. We also intend to focus our efforts on expanding our business in new geographic markets for us such as Japan and expanding our presence in emerging markets such as India and Indonesia and in new market segments such as hospitality, quick-service restaurant and pay-at-the-table in the United States.

Our Business Organization During fiscal year 2017, we managed our business as a single business unit, Verifone Solutions, which is focused on delivering seamless and simple-to-implement solutions that are integrated with our services offerings, including our device, payment, commerce and security-related services offerings. Within Verifone Solutions, we have two global product lines: Verifone Systems and Verifone Services. Verifone Systems delivers point of sale electronic payment devices that run our unique operating systems, security and encryption software, and certified payment software for both payments and commerce. Verifone Services delivers device- related leasing and maintenance, payment transaction routing and reporting, and commerce-based services such as advertising on digital screens. For segment and geographic information, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Segment Results of Operations, Note 1, Principles of Consolidation and Summary of Significant Accounting Policies and Note 14, Segment and Geographic Information, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

Our Industry Trends The electronic payment solutions industry encompasses systems, software, and services that enable the acceptance and processing of electronic payments for goods and services, enable commerce and provide other value-added functionality at the point of sale. The electronic payment system is an important part of the payment infrastructure, serving as the interface between consumers and merchants at the point of sale, as well as the link between the consumer transaction at the point of sale and the payment transaction processing infrastructure.

The global payments industry continues to move towards electronic payment transactions. Consumer habits continue to shift to higher volumes of non-cash transactions with demand for additional payment options. In developed markets, such as the U.S., the continued shift to electronic payments is characterized by an increasing volume of transactions, including an increase in volume of low value card transactions, through multiple payment forms. Our industry continues to move toward advanced payment technologies and methods, and has also seen the emergence of new market entrants, including outside the traditional point of sale providers. Certain regions, such as parts of Europe, Latin America, and Asia-Pacific, currently have relatively low rates of electronic payments, but are experiencing a growing number of such transactions. The adoption of electronic payments in emerging markets is driven primarily by economic growth, infrastructure development, expanding presence of Internet and wireless connectivity and support from governments seeking to modernize their economies and to encourage electronic payment transactions as a means of driving commerce and improving tax collection. In some emerging markets, the trend toward non-cash transactions is driving the need for innovative solutions to address access barriers to large populations of consumers who are not using or able to use the banking and financial systems.

2017 10-K 5 Security continues to be a driving factor in our industry. Payment transaction security needs to become increasingly sophisticated as security threats become more sophisticated, as new payment methods, especially mobile payments, are introduced, and as payment transaction volumes increase. Further, new payment types and platforms make payment transactions more operationally complex and thus exacerbate security concerns and increase the need for security solutions. In the last few years, a number of retailers and banks reported customer or client data breaches and other fraudulent activities, which heightened awareness of data security and increased demand for security solutions in payments systems, including accelerating the adoption of EMV, a Europay, MasterCard and Visa chip based card acceptance payment method, which became the payment standard in other countries. In addition to offering products that are independently certified to meet security standards, we provide secure commerce architecture as well as transaction encryption and tokenization services to facilitate an end-to-end security solution for payments. Our security solutions must continue to evolve to meet changing needs and threats.

We anticipate that the industry will see growing demand for mobile and portable point of sale solutions. In recent years, the increased use of wireless Internet connectivity driven by expanded network coverage, faster communication speeds and reduced costs has driven demand for compact, easy-to-use, and reliable mobile point of sale, or mPOS, payment solutions. We expect rising demand for mPOS devices, including increasing utilization of smartphones and tablets based on the Apple iOS, Google Android, and Microsoft Windows operating systems to conduct payment transactions and to enable new mobile retailing solutions for merchants. Wireless portable devices and mobile devices, such as smartphones and tablets, are also increasingly being used as multi-purpose hardware and integrated software platforms that are being adopted for commerce, payments, and complementary applications, and tablet-based point of sale systems are becoming more common as all-in-one merchant management systems.

Portable and mobile devices may have shorter technology refresh cycles than traditional electronic payment devices. In particular, major telecommunications carriers around the world are phasing out their 2G/GPRS networks in favor of faster and more advanced technologies, such as 3G or later-generation networks.

We expect continued advancement in payment technologies driven by demand for payment solutions that accommodate different payment methods, such as EMV and near field communications, or NFC, and across multiple channels while maintaining a consistent consumer experience. Technological innovation in the payments industry continues to advance as indicated by the emergence and adoption of new payment methods, such as contactless, NFC, and mobile cloud-based payments, including card not present options. We believe that security concerns driven by a number of recent high-profile security breaches at major retailers and banks continues to drive demand for EMV solutions in the United States. Electronic payment methods such as, Apple Pay, whereby consumers are able to use their smartphones to make payments by tapping their phones on a point of sale terminal, such as ours, have increased visibility into NFC which may spur more adoption of NFC, particularly as NFC transactions are considered EMV compliant. We are also working with PayPal, Google, Samsung and other partners to increase the acceptance of digital wallets at large retailers across the U.S. through our NFC-enabled devices. We also believe the potential adoption of EMV in Japan may create new opportunities for us.

Overall, merchants are striving to enrich the consumer experience and to accommodate consumer expectations for payment flexibility by offering a variety of payment options and other value-added services at the point of sale. Merchants increasingly seek more sophisticated tools integrated with payment systems that enable a consistent and seamless experience for consumers across multiple delivery channels, both online and offline. We expect this trend to create a need for a single platform that can support different payment options and delivery channels, and that is offered on a managed service basis to reduce risk and time to market. With the continued emergence of new and innovative technologies, our markets have become increasingly complex, which has in turn driven increasing interest by merchants to outsource managed services solutions such as terminal estate management, gateway transaction services, and payment systems implementation and management.

We expect merchants to increasingly seek to have rich and dynamic interactions with consumers. Customized relevant content at the point of sale, such as promotions, offers, coupons, merchandise suggestions and loyalty programs, offer a means to enrich the consumer experience, particularly in retail and hospitality environments. The time between the initiation and completion of a transaction on a media-enabled payment solution provides merchants the opportunity to engage with consumers. Furthermore, incorporation of emerging

6 2017 10-K technologies, such as Bluetooth low energy, or BLE, and beacons into payment solutions provides consumers with a more personalized experience, while merchants benefit from enhanced ways to engage customers in the store and to streamline the consumer shopping experience across channels.

We expect clients in more price sensitive markets to demand more options for lower cost payments solutions. In price sensitive markets, which include many higher growth markets in Asia, more clients have sought lower cost payment solution options, in many cases including the flexibility for the client to forgo certain features and enhancements but nevertheless have a leading edge payment solution. This trend has increased competition in these markets as clients place less emphasis on branding and added features and enhancements that may otherwise differentiate competing products, and rely primarily on pricing for purchase decisions. While pricing has become a key factor, clients nevertheless seek payment solutions with certain innovative technological features, such as contactless or portability options, and mobile payment solutions that leverage the connectivity of smartphones and tablets, and therefore solutions providers must continue to innovate to address specific market needs while maintaining lower costs.

We expect compliance requirements and regulatory mandates applicable to our industry will continue to expand. Compliance requirements include government regulations related to the prevention of identity theft, as well as operating regulation safeguards issued by the credit and debit card associations. The Payment Card Industry Security Standards Council (PCI SSC) oversees and unifies industry standards, known as PCI standards, to enhance payment card data security and serve as a framework for the safe handling of cardholder information. These standards continually evolve to become more stringent and increasingly dependent on complex measures to protect all payment related data. Compliance requirements and regulatory mandates continue to evolve to accommodate new payment types and related security concerns.

Our products and solutions generally must be certified against applicable payment industry requirements and mandates. The continual evolution of industry security standards drives recertification and replacement of electronic payment systems. In addition to meeting the PCI standards, additional governmental regulations over payment card data security may apply and require separate local certifications in certain non-U.S. countries, such as Australia and Brazil. Certain other countries also have their own set of compliance and certification requirements for payment card data security, including Germany, the United Kingdom, and the Netherlands. Furthermore, in order for our products to be allowed to connect to payment networks, we must obtain certification of the relevant products and solutions with card associations, financial institutions, and payment processors and comply with local government and telecommunications regulations. Some of these certification processes may take up to twelve months to complete. See Item 1, Business-Industry Standards and Government Regulations, for a more detailed description of these standards and regulations.

Products and Services Our System Solutions Our system solutions consist of point of sale electronic payment devices that run both our unique operating system and Android, security and encryption software, and certified payment software. Verifone’s systems solutions are designed to suit our clients’ needs in a variety of environments, including traditional multilane and countertop implementations, self-service and unattended environments, in-vehicle and portable deployments, mobile point-of-sale solutions, as well as fully integrated iPOS solutions. These solutions can securely process a wide range of payment types including signature and PIN-based debit cards, credit cards, NFC/contactless/radio frequency identification cards, or RFID cards, smart cards, pre-paid gift and other stored-value cards, electronic bill payment, signature capture and electronic benefits transfer, or EBT. Verifone’s unique architecture enables multiple value-added applications, including third-party applications, such as gift card and loyalty card programs, healthcare insurance eligibility, and time and attendance tracking, and allows these services to reside on the same system without requiring recertification upon the addition of new applications. We recently launched payment system solutions that enable us to deliver richer media and more complex commerce enablement services on our payment terminals to our merchant clients. Verifone Engage transforms the point of sale into more meaningful interactions, and Verifone Carbon powerfully integrates payment and applications into a single system.

2017 10-K 7 Countertop and PIN pads Designed with merchant and consumer needs in mind, our suite of countertop solutions incorporate compact design, easy installation and consumer-friendly features. Our countertop solutions accept a wide variety of payment options, including contactless, NFC, mobile wallets, and EMV, and support a range of applications, such as pre-paid products, including gift cards and loyalty programs. We also supply secure PIN pads that support credit and debit card, EBT, EMV, and other PIN-based transactions, and include multiple connectivity options and NFC capability. Our countertop solutions support a wide range of certified applications that are either built into electronic payment systems or connect to electronic cash registers, or ECRs, and point of sale systems.

Multilane Our multilane consumer facing commerce devices are designed to allow merchants, particularly in the multi- lane retail environment, to engage in direct consumer interaction through customized multimedia content, in-store promotions, digital offers, and other value-added services using a point of sale device. With these devices, the merchant is able to enrich the customer experience while enabling new merchant revenue opportunities. These products offer features that are important to servicing customers in a multi-lane retail environment, such as user- friendly interfaces, ECR compatibility, durable key pads, multimedia displays and signature capture functionality. Our solutions also support these same features in self-service market segments such as taxis, parking lots/ garages, ticketing machines, vending machines, gas pumps, self-checkouts, and quick service restaurants.

Portable and Mobile Our portable payment devices consist of small, portable, handheld devices that enable merchants to accept electronic payments wherever wireless connectivity is available, and our mobile solutions offer secure mobile payment capabilities for all segments of the mobile point of sale, or mPOS, environment, from large retailers to small merchants, and include devices that attach to, and interface with, iOS, or Android-based smartphones and tablets, enabling these devices to be used as a secure payment device by merchants. Increasingly, clients look for portable options whether to enable electronic payments in new environments or to augment traditional point of sale or ECR environments. Our portable and mobile devices are designed to meet these needs, offering PCI compliant solutions that securely accept a variety of payment types, and providing merchants with increased flexibility to enrich the overall consumer experience whether in or out of the traditional bricks and mortar store location. We expect that market demand for portable and mobile options will continue to grow, particularly in developing countries where wireless and mobile telecommunications networks are being deployed at a much faster rate than wireline networks. We have deployed our portable and mobile solutions in a number of merchant environments, including for retail, restaurant, hospitality, transportation, and delivery businesses where merchants and consumers desire portability but demand secure payment systems to reduce fraud and identity theft.

Petroleum Our family of products for petroleum companies consists of integrated electronic payment systems that combine electronic transaction processing, fuel dispensing, and ECR functions, as well as secure payment systems that integrate with leading petroleum pump controllers. These products, which include our Secure PumpPay devices and related software, are designed to meet the needs of petroleum company operations, where rapid consumer turnaround, easy pump control, and accurate record keeping are imperative. Our products allow our petroleum clients to manage fuel dispensing and control, and enable “pay at the pump” functionality, cashiering, store management, inventory management, and accounting for goods and services at the point of sale.

Unattended and Self-Service Our unattended and self-service payment solutions are designed to enable payment transactions in self- service, high-transaction volume environments, such as vending machines, on-street parking meters, petroleum pumps, ticketing machines and store kiosks, as well as public transportation environments, including buses and rail lines. Our public transportation solutions enable contactless and NFC-enabled fare payments, while other unattended and self-service solutions include versions to accept a range of payment options, including mobile wallets, magnetic stripe, EMV chipcard or NFC or other contactless payment schemes.

8 2017 10-K Network Access Solutions Our network access solutions are designed and customized to support the unique requirements of the electronic payments industry by providing the networking hardware technology and communications infrastructure necessary to achieve connectivity within the point of sale environment. Our Integrated Enterprise Networks are designed to reduce operating costs, protect investments in current legacy networks and work on a wide range of standard network technologies and protocols.

Our Services We continue to invest in developing a broad portfolio of services complementary to our systems solutions and designed to meet a wide range of merchant and partner needs, including removing complexity from commerce and payments, increasing ease of use, adding value by enriching the consumer experience at the point of sale and helping our clients grow their businesses and strengthen their relationships with consumers. Services are an important part of our business and revenues, accounting for approximately 42.0% of our total net revenues in our fiscal year ended October 31, 2017. We offer a wide portfolio of services, ranging from traditional device related support services, transaction payment services, cloud-based payment services, and commerce enablement offerings that are designed to facilitate commerce and payment opportunities for merchants. Our services offerings include our transaction payment services, managed services and terminal management solutions, security solutions, cloud services, and other value-added services at the point of sale. We also offer a host of support services, including software development, installation and deployment, warranty, post-sale support, repairs, and training.

Device Related Support Services We offer a suite of support services, including installation, deployment, standard or customized training, and application development and delivery solutions. We support our installed base by providing payment system 24-hour helpdesk support, consulting, training, repair and/or replacement, asset tracking, and reporting. We also offer customized service programs for specific vertical markets in addition to standardized service plans, per incident repair services and annual software maintenance on some of our licensed software products.

We offer professional services for customized application development and delivery solutions. We also provide specific project management services for turn-key application implementations. We also offer client education programs as well as consulting services regarding selection of product and payment methodologies and strategies such as debit implementation. We believe that our client services are distinguished by our ability to perform large-scale customizations for clients quickly and efficiently.

Our payment devices generally carry a standard one-year warranty. For repairs of defective devices covered by such warranties, we either repair or replace the devices at no charge to the client, except for certain shipping and related costs. For repairs of defective devices not covered by such warranties, we offer repair services in many countries or clients may use our authorized service centers to repair the device.

Transaction Payment Services Our transaction payment services are hosted and managed by us and offered as a subscription-based model that provide clients with the flexibility to outsource a select set of payment operation services and solutions to be managed by us. Our range of services and solutions includes terminal services such as terminal rental and related installation, deployment, on-site terminal servicing, and hardware repair services, as well as gateway transaction payment services such as transaction routing, transaction acceptance processing, transaction reporting, remote device management, and payment value-added services using the client’s choice of processor. Our solutions serve as a platform for deployment of additional value-added programs. Further, our hosted transaction payment service covers 24x7 support, encrypted transactions, integration of new payment methods, ongoing EMV maintenance, merchant support, and PCI compliance, with the aim of reducing operational complexity and costs for clients. Clients also have the option to enable processing of payment types across different channels of a merchant’s business, including credit and debit card payments, online payments for e-commerce applications and mobile platforms. Clients can select full service or other options that meet their immediate business needs, and adjust their subscription service packages to more advanced features and

2017 10-K 9 functions as their businesses grow or as the payment industry evolves. We anticipate that outsourcing of payment operations may become more attractive to clients as payment complexity and cost of payment operations increase.

We also offer server-based software that allows merchants to integrate advanced payment functionality into PC-based and other retail systems seamlessly. These products handle the business logic steps related to an electronic payment transaction (credit, debit, gift, and loyalty), including collection of payment-related information from the consumer and merchant, and communication with payment processors for authorization and settlement. These solutions also enable the functionality of peripherals that connect to PC-based electronic payment systems, including consumer-facing products such as secure PIN pads and signature capture devices. Our PAYware software product line, consisting of server-based, enterprise payment software solutions, now includes card acceptance and merchant acquiring solutions, point of sale integration software, value-added payment solutions, and card management systems.

Commerce Services Omnicommerce Verifone intends to expand its omnichannel commerce solutions to its global payments and commerce clients who are moving away from single or silo channeled commerce solutions. Omni-channel commerce requires the integration and inter-operability of all card-present and card-not-present solutions. Verifone helps our clients navigate this complexity by integrating Verifone’s next-generation devices with our payment gateways, tokenization engine, and reporting capabilities into a single solution. Clients can then take advantage of our ability to provide a single payments and commerce solution across all sales channels, including mobile, PIN, point of sale, and online transactions. By processing customer transactions through our gateway network, clients gain visibility across sales channels and can provide enhanced and integrated customer experiences. Our tokenization engine, which replaces sensitive card data with a unique digital identifier (a “token”), can be used to generate or retrieve tokens to match transactions with a common card. These tokens can retrieve, access, and analyze purchase data for customers repeatedly using a common payment instrument.

Cloud-Based Managed Services Verifone offers a wide range of cloud-based managed services that connect our clients with tools that accommodate their business needs and plans. Our cloud-based managed services connect our clients to secure cloud-based transaction processing that is consolidated across payment types. Verifone’s cloud-connected software services include remote loading of supported devices with updates for base files and firmware, software and applications. Our cloud-based estate management services provides remote key loading, capabilities to remotely activate contactless, NFC and EMV payment methods, and consolidated reporting and analytics. PAYware Connect, our cloud-based hosted payment solution, consolidates all payment transactions through our payment gateway and enables merchants to process from any internet-connected PC through a single portal. PAYware Connect uses our proprietary VeriShield Total Protect for end-to-end transaction encryption and tokenization and is certified by all of the major payment processing networks. In addition, Verifone intends to offer a cloud-based, commerce app marketplace called Merchant Marketplace to certain merchants who are connected through Verifone’s terminal management solutions. With the Merchant Marketplace, merchants and acquirers can customize the point of sale by downloading third-party or proprietary apps. Commerce enablers can use these apps to improve business operations with enhanced functionality, such as inventory and reporting features, or to personalize the shopping experience with loyalty rewards and product recommendations. These cloud-based solutions are offered globally to retailers, acquirers and merchants in the restaurant and hospitality markets who can host the solution on their own servers, but are also available as part of an omni-channel payments solution hosted by us.

Terminal Management Solutions Verifone connects our next-generation of devices to the cloud and enables omnicommerce through our proprietary terminal management solution, VHQ. VHQ both connects our devices to our expanded services and enables efficient management of an entire estate of devices with minimal on-site intervention. These estate management services are targeted to retailers, financial institutions, processors with helpdesk operations, and

10 2017 10-K device maintenance companies, and are available for a variety of environments, including retail, healthcare, transit, quick service restaurants and financial services. VHQ connects the devices within a merchant’s estate to back office operations, enabling secure and remote deployment of software to point of sale terminals, centralized estate tracking, monitoring and diagnostics, and consolidated information collection and management reports. These integrated device services broaden and enhance Verifone’s service relationship with its clients by enabling rapid device deployment and improved device uptime through remote and predictive maintenance.

Libraries and Development Tools We make a broad portfolio of application libraries and development tools available to our large community of internal and third-party application developers, including certain pre-certified software libraries that can be integrated into third-party applications without the need for further card brand certifications. We provide a set of application libraries, or programming modules such as smart card interfaces, contactless card and NFC phone interfaces, and communications drivers with defined programming interfaces that facilitate the implementation of our multi-application system solutions. Further, we maintain application compatibility, including use of standardized application programming interfaces, also known as APIs, and service calls, designed to facilitate the migration of applications to future system solutions.

We also provide developer tool kits that contain industry standard visual development environments (C/C++) along with platform-specific compilers and debuggers. We provide a broad range of support services for our application development communities, including developer training, a dedicated developers’ support team, and Verifone DevNet, an online developers’ portal that provides registered developers access to libraries, tools, programming guides, and technical support. Our libraries, developer tool kits, training, and support systems facilitate the rapid growth in deployment of third-party, value-added applications for our system solutions.

We believe that this growing portfolio of value-added applications increases the attractiveness of our solutions to global financial institutions and payment processors by adding services beyond payment transaction processing. We seek to encourage innovation on our terminal platform and intend to encourage continued development of applications for our system solutions.

Customers Globally, our clients consist primarily of financial institutions, payment processors, large retailers, petroleum companies, transportation companies, government organizations, healthcare companies and quick service restaurants. We also sell payment processing services directly to smaller merchants and retailers. We also sell through third party partners, such as banks and acquirers, system integrators, and independent sales organizations, and channel partners that distribute and resell our products.

The percentage of net revenues from our ten largest clients is as follows:

Years Ended October 31, 2017 2016 2015 Percentage of net revenues from our ten largest clients ...... 19.4% 19.9% 20.2%

Historically, we have experienced fluctuations of orders from clients based on the timing of client technology refresh cycles and/or client capital expenditure decisions, which typically drive larger volume orders. Timing of such cycles from larger clients, such as large retailers and processors, could cause our net revenues and results of operations to vary from period to period. In addition, the timing of adoption of new technologies, such as EMV in the U.S., and timing of releases of regulatory and industry standards, such as PCI standards, as well as releases of new product introductions can significantly impact net revenues, cost of net revenues and operating expenses. Net revenues from both direct clients and our third-party distributors may decline pending an upcoming standards change or in anticipation of a standards change or new product introduction. However, neither historical patterns of net revenues nor timing of net revenues related to releases of new standards or products should be considered reliable indicators of our future net revenues, results of operations or financial performance.

Sales and Marketing We sell our products worldwide through our direct sales force and through third-party distributors and partners. Internationally, we rely on distributors to represent us in countries or geographies where we do not have

2017 10-K 11 a direct presence. As we continue to focus on services, we expect a shift to more direct sales and support personnel.

Our sales personnel consist of sales representatives, business development personnel, sales engineers, and customer service representatives with specific vertical market expertise. Our sales teams are supported by client services, manufacturing, product development, and marketing teams to deliver products and services that meet the needs of our diverse client base. Our marketing personnel include product marketing personnel, account managers, program marketing personnel, and corporate communications and public relations personnel.

As of October 31, 2017, we had 939 sales and marketing employees, representing approximately 16.8% of our total workforce.

Competition The markets for our solutions are highly competitive. We compete based on various factors, including product functions and features, product availability and certifications, product quality and reliability, design innovation, interoperability with third-party systems, service offerings, support, brand reputation and pricing. We continue to experience intense competition from traditional point of sale terminal providers for both systems solutions and services. In addition, we have seen some competitors introduce increasingly aggressive pricing for terminal solutions, particularly in certain emerging markets. We also see new companies entering our markets, including entrants offering some form of mobile-device based payment solution as well as low-cost entrants. Some of our competitors may be more established, benefit from greater local recognition in particular countries, and have greater resources within those countries than we do. Finally, certain of our distributor partners may also offer similar services that we strive to offer to our end merchants.

Competition from manufacturers, distributors, or providers of products and services similar to or competitive with our system solutions or services could result in lower market share, price reductions, reduced margins, or could render our solutions obsolete. Some smaller local electronic payment terminal vendors, particularly in Asia- Pacific and Latin America, have also introduced pricing pressures in their markets by offering substantially lower prices. In addition, a number of the financial institutions and payment processors to whom we market our products typically adopt a dual vendor approach for the supply of their point of sale terminals.

We expect to continue to experience significant competition in the future. We compete globally with suppliers, manufacturers, and distributors of electronic payment systems and services as well as suppliers of ECRs that provide built-in electronic payment capabilities and producers of software that facilitates electronic payments over the Internet. Our primary competitors in these markets for point of sale terminals and services include Ingenico S.A., PAX Technology, Ltd., Fujian Newland, Square, SZZT Electronics Co. Ltd., Shenzhen Xinguodu, Equinox Payments, CyberNet Inc., and Spire Payments Ltd. We also compete with NCR Corporation and Oracle Corporation. In addition, we face vigorous competition from smaller companies that have been able to develop strong local or regional customer bases.

As we focus on specialty services and increase our emphasis on mobile and full service solutions, as well as on small to medium sized enterprises, we face new competitors, including those who in the past targeted merchants that were not traditionally our clients or those who offer competing technologies, such as mobile-based payment dongles or electronic wallets. We believe these competitors are targeting merchants that are our clients.

Most of our clients are large, sophisticated organizations that have significant purchasing power and seek innovative solutions from trusted brands. We believe that we benefit from a number of competitive advantages gained through our more than 35-year history. These advantages include our globally trusted brand name, large installed base, significant involvement in the development of industry standards, security infrastructure, global operating scale, customizable platforms, and investment in research and development. Additionally, we compete primarily on the basis of the following key factors: end-to-end system solutions, industry leading security, product certifications, value-added applications and advanced product features, advanced communications modularity, reliability, supply chain scale and flexibility, and low total cost of ownership.

We expect competition in our industry will be driven by the requirements to respond to increasingly complex and evolving technology, industry certifications, and security standards and requirements, as well as market demands for innovative and flexible payment solution options. We also see the prospect of continued

12 2017 10-K consolidation among suppliers of electronic payment systems as they seek to enhance their capability to carry out research and development and seek other efficiencies, such as in procurement and manufacturing. The rapid technological and other changes in the payments industry have led to increased competition from new technologies and competitors both within and outside our traditional industry.

Research and Development Our R&D activities include design and development of our hardware products and unique operating systems, development of new solutions and applications, attaining applicable certifications and approvals required for our products and solutions, and ensuring compatibility and interoperability between our solutions and those of third parties. We work with our clients to develop system solutions that address existing and anticipated end-user needs. Our development activities are distributed globally and managed primarily from the United States. Our regional application development centers provide customization and adaptation to meet the needs of clients in local markets.

As of October 31, 2017, we had 1,768 R&D employees, representing approximately 31.6% of our total workforce. For the total amounts of our R&D expenses for the fiscal years ended October 31, 2017, 2016, and 2015, see our Consolidated Statements of Operations of this Annual Report on Form 10-K.

Industry Standards and Government Regulations In order to offer products that connect to payment networks, electronic payment system providers must certify their products and services with card associations, financial institutions, and payment processors, as well as comply with government and telecommunications company regulations.

The following are key standards and requirements that apply to our industry:

Security Standards Compliance with industry and government security standards are implemented to ensure the integrity of the electronic payment process and protect the privacy of consumers using electronic payment systems. We design our product security architecture to meet the applicable Payment Card Industry Security Standards Council (PCI SSC) established requirements.

Card Association Standards Payment Card Industry Security Standards Council. Formed in 2006, the PCI SSC develops standards and supporting materials that enhance payment card data security and serve as a framework for the safe handling and protection of cardholder information. The following are the PCI SSC principal standards applicable to our industry: • Payment Card Industry Data Security Standard (PCI DSS) provides a specifications framework for the payment card data environment security including, but not limited to, the policies and processes providing the framework for the prevention, detection, and appropriate reaction to security incidents. • Payment Card Industry Personal Identification Number (PCI PIN) - provides requirements for the secure management, processing and transmission of Personal Identification Number (PIN) during payment card transaction processing at point-of-sale (POS) terminals, encrypting PIN pads, and unattended payment terminals. PCI PIN requirements apply to organizations involved with handling of PIN data including processing, PIN translation, and/or key management. • Payment Card Industry PIN Transaction Security (PTS) provides vendors and manufacturers with the requirements for PIN terminals, including point of sale devices, encrypting PIN pads, and unattended payment terminals. • Payment Application Data Security Standard provides a set of standards to help software vendors and others develop secure payment applications.

2017 10-K 13 • Point-to-Point Encryption (P2PE) provides a set of requirements for vendors, assessors, and point-to-point encryption solution providers to validate their solutions. P2PE certified solutions may help a merchant reduce the scope of their PCI DSS assessments when using a validated P2PE solution for account data acceptance and processing.

EMV Standards. EMV standards are intended to address the growing need for transaction security and interoperability, and are designed to ensure global smart card interoperability across all electronic payment systems. To ensure adherence to this standard, specific certifications are required for all electronic payment systems and their application software. We maintain EMV certifications across our applicable product lines. EMV has already been adopted in many countries outside the U.S., and the adoption of EMV in the U.S. commenced in 2015. EMV is also expected to be adopted in additional countries in the near-term, such as Japan.

Contactless and NFC System Standards. The major card associations have each established a brand around contactless payment, for example, PayPass for MasterCard, Visa payWave and Visa Wave for Visa, ExpressPay for American Express, ZIP for Discover Financial Services, and J/speedy for JCB. Each contactless payment brand has a complete set of specifications, certification requirements and a highly controlled testing and approval process. In addition to EMVCo standards, there are also regional specification and certification and other payment scheme requirements for contactless such as Geldkarte in Germany, and Carte Bancaire in France.

MasterCard PTS and TQM Program. The MasterCard PTS program identifies and addresses stability and security of communications between Internet-enabled point of sale terminals and the acquirer host system using authentication/encryption protocols approved by MasterCard ensuring transaction data integrity. We have successfully achieved VX product-line compliance with the MasterCard PTS security specification regarding security of Internet connected payment systems. As of May 2010, the MasterCard PTS program was subsumed into a PCI SSC PTS 3.x program known as the Open Protocols module. The Open Protocols module addresses point of sale devices that are Internet, WIFI, or GPRS enabled to make sure they are secure. The MasterCard PTS program compliance applies to several of our Internet-enabled products including the VX Evolution series payment systems. The MasterCard TQM (Terminal Quality Management) program was created in 2003 to help ensure the quality and reliability of EMV compliant terminals worldwide. MasterCard’s TQM program validates the entire life cycle of the product, from design to manufacturing and deployment, and is in addition to the EMV Level 1 certification. We maintain TQM approval across all EMV Level 1 approved products deployed with EMV applications. The TQM program is now extended to contactless payment systems and is a requirement for achieving a full PayPass approval with MasterCard.

Payment Processor/Financial Institution Requirements U.S. payment processors have two types of certification levels: (1) Class B certification, which ensures that an electronic payment system adheres to the payment processor’s basic functional and network requirements; and (2) Class A certification, which adds another stipulation that the processor actively supports the electronic payment system on its internal helpdesk systems. Attainment of Class A certification, which may take up to twelve months, requires working with each payment processor to pass extensive functional and end-user testing and to establish the help desk related infrastructure necessary to provide Class A support. Attaining Class A certifications increases the number of payment processors that may actively sell and deploy a particular electronic payment system.

Other Regulatory Authorities Our products must comply with government regulations, including those imposed by the U.S. Federal Communications Commission (the FCC) and similar telecommunications authorities worldwide regarding emissions, radiation, safety, and connections with telephone lines and radio networks. Our products must also comply with recommendations of quasi-regulatory authorities and of standards-setting committees. Our electronic payment systems have been certified as compliant with a large number of national requirements, including those of the FCC and Underwriters Laboratory in the U.S. and similar local requirements in other countries. In addition, wireless network service providers mandate certain standards and certifications applicable to connected devices and systems that operate on their networks. Our wireless electronic payment systems have been certified by certain leading wireless carrier networks around the world.

14 2017 10-K We are also subject to various other legal and regulatory requirements related to the manufacture and sale of our products, such as the U.S. regulations which require us to implement a management system to evaluate and report on the existence of conflict minerals originating in the Democratic Republic of the Congo in our supply chain, the European Union (EU) directive that places restrictions on the use of hazardous substances (RoHS and RoHS2) in electronic equipment, the EU directive on Waste Electrical and Electronic Equipment (WEEE), and the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH). RoHS and RoHS2 set a framework for producers’ obligations in relation to manufacturing (including the amounts of named hazardous substances contained in products sold) and WEEE sets a framework for treatment, labeling, recovery, and recycling of electronic products in the European Union. REACH imposes chemicals regulation and controls including requirements for registration of chemicals on the EU market.

Foreign Operations For our fiscal years ended October 31, 2017 and 2016, our international net revenues accounted for 66.4% and 59.5%, respectively, of our total net revenues. Margins on our sales of products in foreign countries and on sales of our products generally, which include components sourced from foreign suppliers, can be adversely affected by foreign currency exchange rate fluctuations and by international trade regulations, including tariffs and other applicable duties. See “Foreign Currency Transaction Risk” under Item 7A, Quantitative and Qualitative Disclosures About Market Risk in this Annual Report on Form 10-K. In certain regions outside the U.S., we rely on third-party distributors to market and sell our products in accordance with our policies for promotional efforts and maintenance of adequate technical expertise with respect to our products, and with our requirements for compliance with applicable laws, including for example, trade regulations applicable to our products and anti- corruption laws. Although we generally have contractual relationships with these third parties, if such third parties do not comply with our requirements, we face potential liability, harm to our brand reputation, and disruptions to our business, which could have a material adverse effect on our results of operations.

We outsource our product manufacturing to various suppliers in the Electronic Manufacturing Services (EMS) industry. Our primary EMS providers are located in China, Singapore, Malaysia, Brazil, and Germany. For several of our product lines, we directly ship from our EMS providers to our clients in various countries around the world. Substantially all of our products contain key components that are obtained from foreign sources. These concentrations in external and foreign sources of supply present risks of interruption for reasons beyond our control, including political and other uncertainties. See “Manufacturing Agreements” in Note 13, Commitments and Contingencies, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

See also Item 1A, Risk Factors, in this Annual Report on Form 10-K for additional discussion about the risks that we face related to our foreign operations.

Proprietary Rights We rely primarily on copyrights, trademarks, patent filings, and trade secret laws to establish and maintain our proprietary rights in our technology and products. We maintain a patent incentive program and patent committee, which encourages and rewards employees to present inventions for patent application and filings.

As of October 31, 2017, we held 295 patents and 73 patent applications filed with various patent offices throughout the world, including the U.S., China, France, Germany, and the United Kingdom, among other countries. These patents and patent applications include utility patents, utility models and designs acquired in connection with our acquisitions. We believe that the duration of our patents is adequate relative to the expected lives of our products which generally are expected to be shorter than the terms of our patents due to continual technical innovations in our industry.

We use the Verifone name and logo globally as an important part of the branding of our company and our products, and we register these trademarks in the key jurisdictions where we do business, including the U.S. and the EU. As of October 31, 2017, we held trademark registration in 24 jurisdictions (including registration in the European Union that covers a number of country level registrations we had previously filed) for the “VERIFONE” trademark and in 31 jurisdictions (including registration in the EU that covers a number of country level registrations we had previously filed) for the VERIFONE trademark including our ribbon logo. A new VERIFONE logo was filed in the U.S. and was recently granted (on July 16, 2016). We currently hold trademark registration in the U.S. and a variety of other countries for our product names and other marks.

2017 10-K 15 We generally have not registered copyrights in our software and other written works. Instead, we have relied upon common law copyright, customer license agreements, and other forms of protection. We use non-disclosure agreements and license agreements to protect software and other written materials as copyrighted and/or trade secrets.

In the U.S. and other countries, prior to 2001, our predecessor held patents relating to a variety of POS technology and related inventions, which expire in accordance with the applicable law in the country where filed. In 2001, as part of the divestiture of Verifone, Inc. from HP, Verifone, Inc. and HP entered into a technology agreement whereby HP retained ownership of most of the patents owned or applied for by Verifone prior to the date of divestiture. The technology agreement grants Verifone a perpetual, non-exclusive license to use any of the patented technology retained by HP, Inc. at no charge.

Employees As of October 31, 2017, we had approximately 5,600 employees worldwide. We have collective bargaining agreements with our employees in France, Spain, Italy, Norway, Sweden, and Brazil and with some in Germany. Our employees in France, Norway, Sweden, and some in Germany are represented by works councils that have the right to certain information and to participate in certain operational decisions affecting the represented employees, such as relocation of office facilities, compensation and benefits, and working hours. We have not experienced any work stoppages, and we believe that we have good employee relations and relationships with the collective bargaining groups and works councils.

Executive Officers Our executive officers and their ages as of December 18, 2017 are as follows:

Name Age Position Paul Galant ...... 49 Chief Executive Officer Vin D’Agostino ...... 54 Executive Vice President and Chief Strategy Officer Albert Liu ...... 45 Executive Vice President, Corporate Development and General Counsel Glen Robson ...... 49 Executive Vice President, Global Head of Solutions Marc Rothman ...... 53 Executive Vice President and Chief Financial Officer

Paul Galant. Mr. Galant joined Verifone in October 2013 and serves as our Chief Executive Officer and as a director. Prior to joining Verifone, Mr. Galant served as the Chief Executive Officer of Citigroup Inc.’s Enterprise Payments business since 2010. In this role, Mr. Galant oversaw the design, marketing and implementation of global business-to-consumer and consumer-to-business digital payments solutions. From 2009, Mr. Galant served as Chief Executive Officer of Citi Cards, heading Citigroup’s North American and International Credit Cards business. From 2007 to 2009, Mr. Galant served as Chief Executive Officer of Citi Transaction Services, a division of Citi’s Institutional Clients Group. From 2002 to 2007, Mr. Galant was the Global Head of the Cash Management business, one of the largest processors of payments globally. Mr. Galant joined Citigroup, a multinational financial services corporation, in 2000. Prior to joining Citigroup, Mr. Galant held positions at Donaldson, Lufkin & Jenrette, Smith Barney, and Credit Suisse. Mr. Galant holds a Bachelor’s degree from Cornell University where he graduated a Phillip Merrill Scholar. Mr. Galant currently serves on the board of directors of APX Group Holdings, Inc., a home automation services provider, and Conduent, a business process services provider.

Vin D’Agostino. Mr. D’Agostino joined Verifone in January 2014 and serves as our EVP and Chief Strategy Officer. Mr. D’Agostino is responsible for developing, communicating and executing Verifone’s strategy with our Chief Executive Officer, as well as sustaining corporate strategic initiatives. Additionally, Mr. D’Agostino leads business development activities related to large-scale partnerships and Verifone’s omni-channel work stream. Prior to joining Verifone, Mr. D’Agostino was an executive at JP Morgan Chase since 1985. Most recently, he was responsible for the payment business’ enterprise strategy, corporate development activities and the payment steering committee. Prior to his role at JP Morgan Chase, he was a leader at LabMorgan, with responsibility for the incubation and formation of a real-time e-payment platform, evaluating payment investments and providing payment domain expertise. Prior to these roles, he served in various leadership positions in finance, product management, and operations management in Chase’s securities and payments businesses. Mr. D’Agostino holds a Bachelor of Science degree and MBA in Finance from St. John’s University.

16 2017 10-K Albert Liu. Mr. Liu serves as our Executive Vice President, Corporate Development and General Counsel. Mr. Liu joined Verifone in October 2008, as Senior Vice President, General Counsel and Corporate Secretary, and was named Executive Vice President, Corporate Development in August 2011. Mr. Liu is responsible for overseeing corporate development and legal. He also serves as the Company’s corporate secretary and chief compliance officer. Prior to joining Verifone, he was Vice President, Legal and Corporate Development, and Company Secretary for NETGEAR, Inc., a provider of networking solutions, since October 2004. Mr. Liu also previously served as General Counsel, Director of Human Resources and Secretary of Turnstone Systems, Inc., a supplier of digital subscriber line testing equipment and General Counsel and Secretary for Yipes Enterprise Services, a provider of Ethernet connectivity services. Mr. Liu began practicing law with the firm of Sullivan & Cromwell. Before entering the legal field, he was a software engineer at Tandem Computers. He holds dual degrees in Computer Science and Political Science from Stanford University, and a J.D. (magna cum laude) from the University of California, Hastings College of the Law. He is a member of the State Bar of California.

Glen Robson. Mr. Robson joined Verifone in January 2015 and serves as our Executive Vice President, Global Solutions. Mr. Robson is responsible for delivering innovative solutions built around world-class security products, payment and commerce solutions, differentiated value-added services, and a portfolio of payment systems. Mr. Robson is responsible for overseeing our global engineering, product management and marketing organizations. Prior to joining Verifone, Mr. Robson spent 10 years in engineering management positions with Dell, Inc., served as General Manager and Vice President for Dell’s SMB and Consumer Product Group and most recently as Chief Technology Officer for Dell’s Client’s Product Group. Prior to Dell, Mr. Robson held various engineering management positions at Sun Microsystems. Mr. Robson holds a Master’s of Science in Computer Science from the University of Kent.

Marc Rothman. Mr. Rothman serves as our Executive Vice President and Chief Financial Officer, a position he has held since February 2013 and is responsible for finance, information technology and real estate operations. Before joining VeriFone, Mr. Rothman served as Senior Vice President and Chief Financial Officer of Motorola Mobility Inc. from 2010 to 2012, and also played a central role in Motorola Mobility’s spinoff from its former parent company, Motorola Inc., as well as its sale to Google in 2012. He also served in a number of executive finance positions at Motorola throughout his tenure, beginning in January 2000, including Chief Financial Officer of its Broadband Communications, Public Safety, Networks and Enterprise and Mobile Devices global business segments, as well as Motorola’s Senior Vice President, Corporate Controller and Chief Accounting Officer. From 1995 to 2000, Mr. Rothman served in a number of leadership finance roles at General Instrument, which developed integrated and interactive broadband access solutions, including as its Vice President and Corporate Controller. Prior to that, he was employed for eight years at Deloitte & Touche, Audit Advisory Services. Mr. Rothman is a member of the board of directors of Quantum Corporation, a leading expert in scale-out tiered storage, archive and data protection, and providing solutions for capturing, sharing and preserving digital assets over the entire data lifecycle, and he is also a member of the board of directors of Premier Food Concepts, LLC, an operator and owner of fast-casual Mediterranean restaurants, a privately held company. He holds a Bachelor’s degree in Business from Stockton University, where he graduated with Distinction and is a Certified Public Accountant in California (inactive).

Available Information Our website is located at www.verifone.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our website as soon as reasonably practicable after such reports are filed with or furnished to the Securities and Exchange Commission. The reports are also available on the SEC’s website at www.sec.gov. Information contained on our website is not incorporated into this Annual Report on Form 10-K, and any references to our website are intended to be inactive textual references only.

ITEM 1A. RISK FACTORS The risks set forth below include risks related to our business, including operations, market, economic and political conditions, our legal and regulatory environment and our capital structure, and may adversely affect our business, financial condition, results of operations and cash flows. In addition to the risks set forth below and the factors affecting specific business operations identified with the description of these operations elsewhere in this

2017 10-K 17 report, there may also be risks of which we are currently not aware, or that we currently regard as immaterial based on the information available to us, that later prove to be or become material.

Risks Related to Our Business If we do not continually enhance our existing solutions and develop and market comprehensive new solutions and services responsive to technological advancements and customer or end user demand in a timely manner or at all, our net revenues and income will be adversely affected. The market for electronic payment systems is characterized by: • rapid technological advancements; • frequent product introductions and enhancements; • local certification requirements and product customizations; • evolving industry and government performance and security standards and regulatory requirements; • introductions of competitive products, including products that customers may perceive as having better functions and features, and alternative payment solutions, such as mobile payments and processing and digital services, at the POS; and • rapidly changing customer and end user preferences or requirements.

In addition, our competitors have been increasingly aggressive in introducing products and lowering prices. Because of these factors, we must continually enhance our existing solutions and develop and market new solutions, and we must anticipate and respond timely to these industry, customer and regulatory changes in order to remain competitive, all of which have become increasingly challenging as competition intensifies. If we cannot develop new solutions or enhancements to our existing solutions that satisfy customer or end user demand, or if our new solutions or enhancements do not meet local certification requirements or we experience delays in the certification process or meet resistance from clients or merchants or are inhibited by third parties’ intellectual property rights, we will not be able to timely and adequately respond to competitive challenges and technological advancements, and our net revenues and results of operations will be adversely affected. These efforts require management attention and significant investment in research and development as well as increased costs of manufacturing and distributing our systems, and ultimately may not be successful. We may not necessarily be able to increase or maintain prices to account for these costs, which will negatively impact our profitability, cash flows and results of operations. Our business has been in the past, continues to, and may in the future be adversely affected by our failure to timely obtain local certifications or develop software in some markets for certain of our products. In particular, our business would be adversely affected if we are unable to timely obtain certifications or develop software, including for our recently introduced Verifone Engage or Carbon lines of products.

We cannot be sure that we will successfully and timely complete the development, delivery and introduction of new solutions or enhancements or that our new solutions will satisfy customer or end user demand or be accepted in the marketplace. If we fail, we may lose market share to existing or new competitors and competing technologies, our solutions could become obsolete and our net revenues, income and profitability will suffer.

We continue to experience significant and increasing levels of competition from existing and new competitors and a variety of technologies. The markets for our systems and services are highly competitive and rapidly evolving, and we have been and expect to continue to be subject to significant and increasing competition from existing and new competitors and a variety of technologies. Traditionally, we have competed with other large manufacturers and distributors of electronic point of sale payment solutions, suppliers of cash registers that provide built-in electronic payment capabilities and producers of software that facilitates electronic payment over the Internet. In certain areas, we also compete with smaller companies that have been able to develop strong local or regional customer bases. We compete with companies that are more established, benefit from greater name recognition in particular countries, and have greater resources within those countries than we do. In addition, some of these competitors compete with aggressive pricing. At the same time, we also compete with new and emerging companies that are disrupting

18 2017 10-K traditional markets and sectors. For example, as ridesharing companies and other taxi alternative companies expand and gain market share, the market for our taxi products could be negatively impacted. Failure to anticipate, adapt or keep pace with new technologies could harm our business and impact our future growth. For example, new technologies such as crypto-currencies and distributed ledgers and new authentication technologies (such as biometrics) may result in the introduction of new services and products, and it may be difficult to predict which technological developments or innovations will become widely adopted, how these technologies may be regulated, and how they will impact our offerings and business.

We face downward pressures on prices in many emerging markets, including high growth emerging markets. For example, price competition is typically intense for us in countries such as India, Brazil, Mexico, Southeast Asia and Russia from both global and local competitors. In addition, pricing is increasingly an important factor in our ability to penetrate new markets. Any decrease in our selling prices in order to become and remain competitive in these markets could negatively impact our net revenues, gross margins and results of operations.

We also face competition from alternative payment solutions, such as mobile device-based card payment and processing solutions that offer customers the ability to pay on mobile devices through a variety of payment methods. Some of these alternative solutions enable payment and processing at the point of sale without use of traditional payment terminals, such as those we manufacture and sell. In addition, some of these alternative solutions are offered by companies that are significantly larger than we are. Competition from these alternative solutions, particularly as they are deployed globally could reduce demand for our traditional payment terminals and our services offerings and have an adverse effect on our results of operations.

As discussed in “If we are unsuccessful in executing on our implementation of payment-related services offerings in new markets and obtaining and maintaining customer acceptance of our service offerings, our net revenues, income and profitability will be adversely affected”, the competitive environment for services offerings is complex and very different in each market and, in some markets, our competitors include certain of our customers that distribute our terminals. Some of our competitors may offer more services, have better name recognition in that market or have a longer or more established relationship with customers in that market than we do. Some of our competitors also control other products and services that are important to our success, including platforms required for our planned expansion of payment-related services, or may acquire or develop exclusive strategic relationships with key distributors upon whom we previously relied.

We expect to continue to experience significant and increasing competition. Our net revenues, income and profitability will be negatively impacted if we do not effectively compete with existing competitors and new market entrants. If we cannot develop and offer, in a timely and cost-effective manner, technological features our customers desire or offer alternative solutions that align with shifts to payment on devices other than the traditional point of sale terminal, we may lose customers and market share, experience price reductions and/or reduced margins, or, in some cases, cease to participate in the market at all. Furthermore, as we respond to changes in the competitive environment, we may, from time to time, make pricing, product offering or service decisions or acquisitions that may lead to dissatisfaction among our customers and partners and harm our revenues and/or profitability.

Security is vital to our customers and end users, and breaches in the security of our solutions could adversely affect our reputation and results of operations. We operate in an industry that makes us a target of cyber- attacks on our systems and payment solutions. Our business involves the collection, transmission, storage and use of proprietary data or personally-identifying information of our customers, business partners and employees, as well as, in certain cases, end-users of our products or services. We rely on electronic networks, computers, systems, including our gateways, programs to run our business and operations, our employees and third party technology and IT infrastructure providers and, as a result, are potentially exposed to the risk of security breaches, computer or other malware, viruses, social engineering or general hacking, industrial espionage, employee or third party error or malfeasance, or other irregularities or compromises on our systems or those of third parties which could result in the loss or misappropriation of sensitive data, corruption of business data or other disruption to our operations. Outside parties may also attempt to fraudulently induce our employees, customers, business partners, service providers and other users of our solutions to disclose information in order to gain access to sensitive data and our solutions. As we expand our solutions and services and handle increasing volumes and types of sensitive data, we may

2017 10-K 19 increasingly become a target of security breach attempts. We have devoted significant resources to security measures, processes and technologies to protect and secure our networks and systems, but they may not be sufficient to protect against threats to our systems and solutions.

The techniques used to obtain unauthorized access to, or to disable or degrade, electronic networks, computers, systems and solutions are rapidly evolving and have become increasingly complex and sophisticated. An increasing number of companies have disclosed security breaches of their IT systems and networks, some of which have involved sophisticated and highly targeted attacks. We believe such incidents are likely to continue, and we are unable to predict the direct or indirect impact of these future attacks to our business. The techniques used to breach security safeguards evolve rapidly, and they may be difficult to detect for an extended period of time or until launched against a target. Even when a security breach is detected, the full extent of the breach may not be determined for some time. Security threats may also be state sponsored and supported by significant financial and technological resources, potentially making them even more difficult to detect. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, as these threats continue to evolve and increase, we may be required to devote significant additional resources to enhance our security measures, processes and technologies and to identify and remediate security vulnerabilities.

In addition, cybercrime hackers have specifically targeted point-of-sale credit card payment systems. Overall payment network security depends upon a number of factors outside our control, including the merchant or service provider network environment in which our systems are installed, the merchant’s or service provider’s adherence to security protocols in the installation, use and operation of our solutions and implementation of and adherence to compliant security processes and practices for its network. Even if there is no compromise to our solutions, any security breach or compromise in any part of a merchant’s or service provider’s network could result in negative media and/or reputational harm to us, or other costs or damages to us, all of which could have a material adverse impact on our results of operations.

We have in the past experienced and may in the future experience security breaches related to unauthorized access to sensitive customer information. If the security of our solutions is compromised, our reputation and marketplace acceptance of our solutions will be adversely affected, which would cause our business to suffer. We may also be subject to damages claims, lost sales, fines, investigations or lawsuits, which could lead to restrictions imposed on our business and otherwise adversely affect our results of operations. Also, any reputational damage resulting from a data security breach or system failure at one or more of our clients, merchants or other third parties could decrease the use and acceptance of our products, which could harm our payments volume, revenues and future growth prospects. In addition to the risks relating to general confidential information described above, we may also be subject to specific obligations relating to payment card data. Under payment card rules and obligations, if cardholder information is potentially compromised, we could be liable for associated investigatory expenses and could also incur significant fees or fines if we were to fail to follow payment card industry data security standards. In addition, if we do fail to follow payment card industry data security standards, our ability to market and sell our solutions could suffer, which could materially adversely affect our reputation,financial condition and operating results. The costs associated with preventing breaches in the security of our solutions, such as investment in technology and related personnel and costs associated with the testing and verification of the security of our solutions, could also adversely impact our financial condition and results of operations. While we maintain insurance coverage that is intended to address certain aspects of the data security risks to which we are exposed, our insurance policies carry low coverage limits, and may not be adequate to reimburse us for losses caused by security breaches.

Our quarterly operating results may fluctuate significantly as a result of factors outside of our control, which could cause the market price of our stock to decline. We expect our net revenues and operating results to vary from quarter to quarter. As a consequence, our operating results in any single quarter may not meet the expectations of securities analysts and investors, which could cause the price of our stock to decline. Factors that may affect our operating results include: • the type, timing, and size of orders and shipments; • delays in the implementation, including obtaining certifications, delivery and customer acceptance of our products and services, which may impact the timing of our recognition, and amount, of net revenues;

20 2017 10-K • delays in customer purchases in anticipation of product or service enhancements or due to uncertainty in economic conditions; • demand for and acceptance of our new offerings; • changes in competitive conditions, including from traditional payment solution providers and from alternative payment solution providers; • the rate at which we transition customers to our services model; • timing of or completion of divestitures; • decisions by our distributors and other customers relating to the overall channel inventories of our products held in a particular quarter; • excess inventory; • concentration in certain of our customer bases; • changes in economic or market conditions, such as fluctuations in foreign currency exchange rates; • variations in product and service mix and cost during any period; • development of new customer and distributor relationships or new types of customers, penetration of new markets and maintenance and enhancement of existing relationships with customers, distributors and strategic partners, as well as the mix of customers in a particular quarter; • component supply, manufacturing, or distribution difficulties; • timing of commencement, execution, or completion of major product or service implementation projects; • timing of governmental, statutory and industry association requirements, such as PCI compliance deadlines, EMV liability deadline extensions, or the pace of EMV adoption in the U.S. or elsewhere; • the introduction, modification or termination of government initiatives relating to cashless payments; • the relative geographic mix of net revenues; • the fixed nature of many of our expenses; • the timing, effectiveness and efficiency of our restructuring activities; • changes in credit card interchange and assessment fees, which are set by the credit card networks and are a component of the cost of providing some of our product offerings, including transaction payment services and in-taxi payments solutions; • the introduction of new or stricter laws and regulations in jurisdictions where we operate, such as data protection and privacy laws and regulations, laws and regulations covering hazardous substances, or employment laws and regulations, that may cause us to incur additional compliance or implementation costs and/or costs to alter our business operations; • the introduction of new laws and regulations, or changes in implementation of existing laws and regulations, in jurisdictions where we operate that may create uncertainty regarding the business operations of our customers or distributors, which may in turn lead to deferred or reduced orders from our customers or distributors; and • business and operational disruptions or delays caused by political, social or economic instability and unrest, such as the ongoing significant civil, political and economic disturbances in Russia, Syria, Turkey, Ukraine and their spillover effect on surrounding areas as well as the political and military conditions in Israel and the Palestinian territories.

No single factor above is dominant, and any of the foregoing factors could have an adverse effect on our operating results.

2017 10-K 21 In addition, we have experienced in the past and may continue to experience periodic variations in sales in our key vertical and geographical markets. In particular, differences in relative growth rates among our businesses in the U.S. and other regions may cause significant fluctuation in our quarterly operating results, especially our quarterly gross profit margins, because net revenues generated from emerging markets tend to carry lower margins. Furthermore, revenue increases due to the adoption of standards such as EMV in the United States have in the past slowed and declined and may in the future slow or decline or not be sustained. In addition, the pace of EMV adoption in the U.S. will impact our revenues and operating results. In Latin America and some other markets, continued overall economic weakness and the contraction of certain economies in the region could cause our revenues to decline as customers delay or reduce orders. These periodic variations occur throughout the year and may lead to fluctuations in our quarterly operating results depending on the impact of any given market during that quarter and could lead to volatility in our stock price.

We may suffer losses due to fraudulent activities. We are expanding our service solutions offerings. Some of our service solutions offerings include our gateway services for credit card transactions. We may be subject to losses in the provision of such services in the event of fraudulent activities or errors in connection with such transactions. As we expand such service solutions offerings, we may increasingly become a target of fraudulent activities and our exposure to the risk of losses from such activities may increase, which may adversely impact our business, results of operations and financial condition. Further, the occurrence of fraud perpetrated on our solutions may result in negative publicity and user sentiment which could harm our brand and reputation and impair our ability to retain or attract users of our solutions.

A majority of our net revenues are generated outside the U.S.; accordingly, fluctuations in currency exchange rates may adversely affect our results of operations. A substantial portion of our business consists of sales made to customers outside the United States. A portion of the net revenues we receive from such sales is denominated in currencies other than the U.S. dollar, primarily the Euro, the Brazilian real, the British Pound and the Swedish Krona. Additionally, portions of our cost of net revenues and our other operating expenses are incurred by our international operations and denominated in local currencies, primarily the Euro, the Brazilian real, the British Pound, and the Swedish Krona. Fluctuations in the value of these net revenues, costs and expenses as measured in U.S. dollars have historically affected our results of operations, and adverse currency exchange rate fluctuations may have a material impact in the future. Further, changes in exchange rates that strengthen the U.S. dollar could increase the price of our U.S. dollar- denominated products in the local currencies of the foreign markets we serve, making our products relatively more expensive than products that are denominated in local currencies, which could lead to a reduction in our sales and profitability in those markets. In recent periods, the U.S. dollar has strengthened, in some cases significantly, against certain major currencies in which we transact, such as the Euro, the Brazilian real, and the Argentina Peso, impacting negatively our results of operations. Additionally, the 2016 referendum vote in the U.K. to exit the European Union, commonly known as “Brexit,” caused significant short term volatility in global stock markets as well as currency exchange rate fluctuations, resulting in further strengthening of the U.S. dollar, including against the British Pound. In addition, our balance sheet contains monetary assets and liabilities denominated in currencies other than the U.S. dollar, such as cash, intercompany balances, trade receivables and payables, and fluctuations in the exchange rates for these currencies could adversely affect our results of operations.

We have entered into foreign exchange forward contracts intended to hedge a portion of our balance sheet exposure to adverse fluctuations in exchange rates. These hedging arrangements can be costly and may not always be effective, particularly in the event of imprecise forecasts of non-U.S. dollar denominated assets and liabilities. In addition, we may be unable to hedge currency risk for some transactions due to cost or because of a high level of uncertainty or the inability to reasonably estimate our foreign exchange exposures. For some currencies in which we do business, hedging instruments may not be available on any terms.

We have also effectively priced our systems and services solutions in U.S. dollars in certain countries. Additionally, our efforts to effectively price products in U.S. dollars may have disadvantages as they may affect demand for our products if the local currency strengthens relative to the U.S. dollar. We could be adversely affected when the U.S. dollar strengthens relative to the local currency between the time of a sale and the time we receive payment, which would be collected in the devalued local currency. Accordingly, if there is an adverse

22 2017 10-K movement in one or more exchange rates, we might suffer significant losses and our results of operations may otherwise be adversely affected. Uncertainty in global market conditions has resulted in and may continue to cause significant volatility in foreign currency exchange rates which could increase these risks. As our international operations expand, our exposure to these risks also increases.

We intend to expand our operations internationally, and our results of operations could suffer if we are unable to manage our international expansion effectively. The percentage of our net revenues generated outside of the U.S. is significant and may increase over time. In particular, our acquisition of InterCard significantly increased our business in Germany and our acquisition of Panaroma is intended to increase our business in Turkey. Part of our strategy is to expand our penetration in existing foreign markets and to enter new foreign markets, particularly high growth emerging markets where we expect to see growth in electronic payments and related services. Our ability to penetrate some international markets may be limited due to different technical standards, protocols or product requirements. For example, we divested our controlling interest in the entity that operated our China business, in order to potentially enable the entity to better provide products and solutions that meet the requirements of the China market. Expansion of our international operations will require significant management attention and financial resources. Certain emerging markets, including those in the Middle East and Africa, may require longer lead times to develop distribution channels, may involve distribution channels with greater business and operational risk due to their relatively shorter operating histories, may be dependent upon the timing and success of local electronic payments initiatives and related infrastructure investments in such markets, as well as require additional time and effort to obtain product certifications and gain market acceptance for our products. Our international net revenues will depend on our success in a number of areas, including: • securing commercial relationships to help establish or increase our presence in new and existing international markets; • hiring and training personnel capable of marketing, installing and integrating our solutions, supporting customers, and effectively managing operations in foreign countries; • adapting our solutions to meet local requirements and regulations, and to target the specific needs and preferences of foreign customers, which may differ from our traditional customer base in the markets we currently serve; • building our brand name and awareness of our services in new and existing international markets; • enhancing our business infrastructure to enable us to efficiently manage the higher costs of operating across a larger span of geographic regions and international jurisdictions; and • implementing effective systems, procedures, and controls to monitor and manage our operations across our international markets.

As discussed more extensively under “If we fail to address the challenges and risks associated with international operations, including those through expansion and acquisitions, we may encounter difficulties implementing our strategy, which could impede our growth or harm our operating results”, if we cannot effectively manage our international expansion, our results of operations could suffer.

If we fail to address the challenges and risks associated with international operations, including those through expansion and acquisitions, we may encounter difficulties implementing our strategy, which could impede our growth or harm our operating results. We are subject to risks and costs associated with operating in foreign countries which could negatively impact our results of operations or cash flows. In addition, if we are not able to effectively manage these risks, our strategy of international expansion will be negatively impacted.

Our international operations expose us to a number of risks, including: • multiple, changing, and often inconsistent enforcement of laws and regulations; • local regulatory or industry imposed requirements, including security or other certification requirements; • competition from existing market participants, including strong global or local competitors that may have a longer history in and greater familiarity with the international markets we enter;

2017 10-K 23 • tariffs and trade barriers, including the imposition of new or enforcement of existing import restrictions in jurisdictions in which we do business; • higher costs and complexities of compliance with international and U.S. laws and regulations such as import and trade regulations and embargoes, boycotts, trade agreements, trade sanctions, export requirements and local tax laws; • laws and business practices that may favor local competitors; • changes in trade relations and trade policy as a result of the 2016 U.S. presidential election, including implementation of or changes to trade sanctions, tariffs and embargoes; • restrictions on the repatriation of funds, including remittance of dividends by foreign subsidiaries, foreign currency exchange restrictions, and currency exchange rate fluctuations; • pricing sensitivities, less favorable payment terms and increased difficulty in collecting accounts receivable and developing payment histories that support collectability of accounts receivable and revenue recognition; • different and/or more stringent labor laws and practices, such as the mandated use of workers’ councils and labor unions, or laws that provide for broader definitions of employer/employee relationships; • different and/or more stringent data protection, privacy and other laws; • the introduction, modification or termination of government initiatives relating to cashless payments; • antitrust and competition regulations; • infrastructure challenges; • supply chain challenges and product delivery delays; • changes or instability in a specific country’s or region’s political or economic conditions; and • greater difficulty in safeguarding intellectual property, including in areas such as China, India, Russia, and Latin America.

Many of these factors typically become more prevalent during periods of economic stress, such as the ongoing weakness in the economies of the euro zone countries and Latin America countries and volatility in global financial markets, or disruptive events such as natural or man-made disasters or military or terrorist actions. The occurrence or persistence of weakened global economic conditions in one or more regions where we do business may exacerbate certain of these risks. Additionally, these risks and costs associated with operating in foreign countries are heightened with respect to our international expansion into emerging or developing markets, which, for example, tend to experience more economic and political instability or have less developed or sophisticated distribution channels.

We are subject to foreign currency risk including that from economic and political instability which can lead to significant and unpredictable volatility in currency rates, including as a result of significant currency devaluations, which may negatively impact our net revenues, gross margins, results of operations and financial position. Although we engage in some hedging of our foreign currency exposures, we do not hedge all such exposures and our hedging arrangements may not always be effective. The uncertainty with respect to the ability of certain European countries to continue to service their sovereign debt obligations, related European financial restructuring efforts and the eventual exit of the U.K. from the European Union as a result of the Brexit referendum may cause the value of the Euro and the British pound to decline. The current political situation in Ukraine, the sanctions imposed against Russia by certain European nations and the U.S., Russia’s response to these sanctions, and any changes in U.S. policy as a result of the 2016 U.S. presidential election may further increase the economic uncertainty in the affected regions and lead to further fluctuation in the value of foreign currencies, such as the Euro and Russian ruble, used in these regions. Similarly, an economic downturn in China or a further decrease in economic growth in China could lead to currency fluctuations that impact us. See “A majority of our net revenues are generated outside the U.S.; accordingly, fluctuations in currency exchange rates may adversely affect our results of operations” and Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Transaction Risk in this Annual Report on Form 10-K for the fiscal year ended October 31, 2017.

24 2017 10-K In addition, compliance with foreign and U.S. laws and regulations, including changes and additions to such laws and regulations, that are applicable to our international operations is complex and may increase our cost of doing business in international jurisdictions. Our international operations could expose us to fines and penalties if we fail to comply with these regulations. These laws and regulations include import and export requirements, trade restrictions and embargoes, exchange control regulations, data privacy requirements, labor laws, tax laws, anti-competition regulations, U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to governmental officials and other improper payments or inducements, such as the U.K. Bribery Act. Although we have implemented policies, procedures and training designed to ensure compliance with these laws and regulations, there can be no assurance that our employees, contractors, distributors, suppliers and agents will not take actions in violation of our policies, particularly as we expand our operations through organic growth and acquisitions, including acquisitions of businesses that were not previously subject to and may not have familiarity with U.S. and other laws and regulations applicable to us or compliance policies similar to ours. For example, as described under the caption “Disclosures of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934” in Part I, Item 1, Business, of our Annual Report on Form 10-K filed with the SEC for the fiscal year ended October 31, 2013, in early 2013, we submitted a voluntary disclosure to the U.S. Department of Treasury’s Office of Foreign Assets Control in connection with certain unauthorized activities by employees of one of our non-U.S. subsidiaries that involved potential violations of sanctions regulations. Any violations of sanctions or export control regulations or other laws could subject us to civil or criminal penalties, including the imposition of substantial fines and interest or prohibitions on our ability to offer our products and services to one or more countries, and could also materially damage our reputation, our brand, our international expansion efforts and our business, and negatively impact our operating results.

Our international operations tend to carry solutions with lower average selling prices, may be subject to greater downward pressure on prices in some markets and may be associated with higher costs and lower gross margins, which may promote volatility in our results of operations and may adversely impact future growth in our earnings. Our international sales of systems tend to carry lower average selling prices and therefore have lower gross margins than our sales in the United States. We also face downward pressure on prices in certain international markets such as Southeast Asia, where competition from local low-cost and global competitors has intensified, Brazil, where competition has intensified, and India where we continue to work to expand our business. In these and certain other markets, some customers increasingly seek lower-cost solutions suited to their markets that may have similar, different, and in some cases, better features and functionality. In addition, the costs associated with international trade may be higher as a result of the importation costs, duties and trade requirements or other import or export control laws and regulations imposed by some jurisdictions where we do business. As a result, any improvement in our results of operations from our international expansion will likely not be as favorable or profitable as an expansion of similar magnitude in the United States. In addition, if we are unable to accurately predict for any future period our proportion of net revenues that will result from international sales versus sales in the U.S., variations from period to period may lead to volatility in our results of operations and may adversely impact future growth in our earnings.

Macroeconomic conditions and economic volatility have in the past and could in future periods materially and adversely affect our business and results of operations. Our operations and performance depend significantly on global and regional economic conditions. For example, the current continued and prolonged weak macro-economic conditions in Europe and in some euro zone countries have resulted in a slowdown, and in some cases deferrals, of orders by customers, which has adversely impacted our business, financial condition and results of operations. Similarly, the significant slowdown and volatility in the U.S. and international economy and financial markets which began in the latter half of 2008 resulted in reduced demand for our products and adversely affected our business, financial condition and results of operations. The lower-than-expected growth rates in certain emerging market economies in which we operate have also had an adverse effect on our results of operations in these regions. More recently, the volatility in oil prices has resulted in, and may continue to result in, decline in demand and overall weaker market conditions in countries and regions heavily dependent on oil revenues, such as Russia, Venezuela, Mexico, and the Middle East. In particular, the slowdown and volatility in the global markets resulted in softer demand in the financial and retail sectors, pricing pressures and more conservative purchasing decisions by customers, including a tendency toward lower-priced products and lower volume of purchases. In some countries where we do business, the

2017 10-K 25 weakened economy has resulted in economic instability which has had negative effects, including a decrease in purchasing power due to currency devaluations. If these weak macro-economic conditions continue or if any economic recovery remains slow and fragile or is not sustained, our net revenues, business, financial condition and results of operations could be adversely impacted.

We expect certain markets where we conduct business, including parts of Europe and Latin America, to continue to experience weakened or uncertain economic conditions in the near term, and some of our customers, prospective customers, suppliers, distributors and partners will continue to be negatively impacted by the continued global weakness in the economy. We cannot predict the extent and duration of the negative impact that global and regional economic volatility may have on our business, operating results and financial condition. There is no assurance that governments and central banks will take actions to further stimulate the economy or that any such actions will have positive or lasting impacts. Existing stimulus measures may also be withdrawn or reduced, introducing greater economic uncertainty or volatility. Further, conditions such as political situations or terrorist actions in other parts of the world, such as Europe and parts of Asia-Pacific, the continued uncertainty related to economic conditions in the U.S., any potential, additional congressional actions regarding the national debt ceiling and federal budget deficit, changes to the federal income tax code and related policies, the potential effect of any future federal government shutdown, and additional costs related to changes in or repeal of the Affordable Care Act, as well as high unemployment rates in certain regions, may negatively impact global economic conditions, including corporate and consumer spending, and liquidity of capital markets. Continued volatility in market conditions, such as fluctuations in foreign currency rates relative to the U.S. dollar, make it difficult to forecast our financial guidance and/or to meet such guidance. If we fail to meet our financial guidance or the expectations of investment analysts or investors in any period, the market price of our stock could decline.

The United Kingdom’s vote to exit from the European Union could adversely impact us. On June 23, 2016, in a referendum vote commonly referred to as “Brexit,” a majority of British voters voted to exit the European Union. In March 2017, the U.K. government officially triggered the process to formally initiate negotiations for the terms of separation from the European Union. In June 2017, the U.K. government began negotiations to leave the European Union. A withdrawal could potentially disrupt the free movement of goods, services and people between the U.K. and the European Union, undermine bilateral cooperation in key geographic areas and significantly disrupt trade between the U.K. and the European Union or other nations as the U.K. pursues independent trade relations. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which European Union laws to replace or replicate. The effects of Brexit will depend on any agreements the U.K. makes to retain access to European Union or other markets either during a transitional period or more permanently. Because this is an unprecedented event, it is unclear what long-term economic, financial, trade and legal implications the withdrawal of the U.K. from the European Union would have and how such withdrawal would affect our business globally and in the region. In addition, Brexit may lead other European Union member countries to consider referendums regarding their European Union membership. Any of these events, along with any political, economic and regulatory changes that may occur, could cause political and economic uncertainty in Europe and internationally and harm our business and financial results.

Sanctions against Russia, and Russia’s response to those sanctions, including the imposition of sanctions by Russia, could materially adversely affect our business, results of operations and financial condition. In March 2014, the Crimean region of Ukraine was annexed by Russia. In response, other nations, including the U.S., have imposed or are considering imposing, economic sanctions on Russia. Recently, concerns related to the political and military conditions in the region have prompted stringent restrictions by the U.S. and European Union, and increasing levels of economic sanctions, targeting certain Russian companies in the finance, energy and defense industries and additional Russian nationals, as well as imposing restrictions on trading and access to capital markets. In response, Russia announced its own trading sanctions against nations that implemented or supported the anti-Russia sanctions, including the U.S. and some European Union nations. Russia has also announced potential sanctions against Turkey in response to a military incident between Turkey and Russia in November 2015. A portion of our net revenues are from Russia and its surrounding areas, including Ukraine and Turkey. Economic sanctions imposed by the U.S., the European Union, Russia, Turkey or the world community may result in serious economic challenges in Ukraine, Turkey, Russia and the surrounding areas, and imposition

26 2017 10-K of trade restrictions may delay or prevent shipment of products to or services performed in those countries, which could have an adverse effect on our results of operations. In addition, to the extent it is more difficult for some of our customers to obtain financing or access U.S. dollar currency, due to restrictions on access to international capital markets as a result of the sanctions, our customers’ ability to pay could be adversely affected, which could have a material adverse impact on our business, cash flows, results of operations and financial condition. Further, current and any future retaliatory measures by Russia in response to anti-Russia sanctions could adversely affect European and Middle East economic conditions, which could in turn affect our business in Europe, Turkey and elsewhere. Accordingly, sanctions against or by Russia and the responses to sanctions, including potential responses by Turkey to sanctions imposed by Russia, could have a material adverse effect on our business, results of operation and financial condition. Further, it is unclear whether any changes in U.S. policy regarding sanctions against Russia will be forthcoming as a result of the new U.S. presidential administration and how those potential changes may impact the U.S., Russia and world economies and our business.

Our solutions may have defects or experience field failures that could delay sales, harm our brand, increase costs and result in product recalls and additional warranty and other expense. We offer complex solutions that are susceptible to undetected hardware and software errors or failures. Our solutions may experience failures when first introduced, as new versions or enhancements are released, or at any time during their lifecycle. Despite our testing procedures and controls over manufacturing quality, errors may be found in our products. Field failure may result from usage with third-party issued payment cards, for example, if such usage generates excess electrostatic discharge. Defects may also arise from third-party components that are incorporated into our products, such as hardware modules, chipsets, wireless modules or battery cells. Our customers may also run third-party software applications on our electronic payment systems. Errors in such third- party applications could adversely affect the performance of our solutions or cause the loss of data. Any product recalls or delays in implementation of our products as a result of, or perceived to be resulting from, our errors or failures could result in the loss of customers, fines incurred by our customers due to failure to comply with payment system rules for which we may be obligated to compensate our customers, loss of or delays in market acceptance of our solutions, diversion of the attention of our research and development personnel from product development efforts and harm to our credibility and relationships with our customers, adversely affect our business and reputation, and increase our product costs which could negatively impact our margins, profitability, and results of operations. Any significant returns or warranty claims for any of our products, including products from acquisitions, could result in significant additional costs to us, such as costs to implement modifications to correct defects, recall and replace products, and defend against litigation related to defective products or related property damage or personal injury, and could adversely affect our results of operations.

Identifying and correcting defects can be time-consuming, costly and in some circumstances extremely difficult. It may take several months to correct software errors, and even longer for hardware defects. The delays in correcting product defects could exacerbate the adverse impact product defects or failures may have on our business, results of operations, financial condition and reputation.

Disruptions in our solutions could reduce our revenues, increase costs, harm our reputation, result in loss of customers and materially impact our results of operations and financial condition. Our solutions may experience service interruptions, degradation or other failures because of hardware and software defects or malfunctions, computer denial-of-service and other cyberattacks, human error, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer or other malware, viruses, social engineering, general hacking, or other events. Our solutions also may be subject to break-ins, sabotage and intentional acts of vandalism. Some of our solutions are not fully redundant, and our disaster recovery planning may not be sufficient for all eventualities.

Disruptions in our solutions may result in our customers’ inability to process transactions using our terminals or gateways, lead to loss of revenues for us and materially impact our results of operations and financial condition. We may have to spend resources to detect and fix defects that caused such disruptions, and we cannot guarantee that we will be able to detect and fix all such defects. Moreover, to the extent that any disruption results in damages to our customers or their businesses, these customers could seek significant compensation or contractual penalties from us for their losses and those claims, even if unsuccessful, would likely be time-

2017 10-K 27 consuming and costly for us to address. Our brand may be permanently harmed by disruptions in our solutions and we may lose customers to our competitors, which could result in financial or reputational harm to our business. Disruptions in our solutions may also cause potential customers to believe that our systems are unreliable, leading them to avoid our solutions.

Changes to our management and strategic business plan and restructuring activities may cause uncertainty regarding the future of our business, and may adversely impact employee hiring and retention, our stock price, our customer relationships, and our results of operations and financial condition. We have experienced, and may experience in the future, changes in our management team. In 2013, the Board appointed Mr. Paul Galant as our CEO and Mr. Marc E. Rothman as our new CFO. Further, since Mr. Galant’s appointment, we have announced certain other sales, technology, marketing, human resources, and operations management changes. During this time of transition, our new executive leadership and our continuing executives have been designing and implementing changes to our strategic business plans, in order to better position the company for strategic growth and long-term profitability. In addition, we have initiated certain restructuring activities in accordance with our approved restructuring plans, reducing the number of employees and contractors in certain areas and reassigning certain employee duties, and consolidating excess facilities. Our management changes, changes to our strategic business plan, and restructuring activities, as well as the potential for additional changes or activities in the future, may introduce uncertainty regarding our business prospects and may result in disruption of our business and our customer relationships. In addition, these changes and measures could distract our employees, decrease employee morale, result in failure in meeting operational targets due to the loss of employees and make it more difficult to retain and hire new talent, increase our expenses in terms of severance payments and facility exit costs, both of which could be significant, expose us to increased risk of legal claims by terminated employees, and harm our reputation. These changes and activities could also increase the volatility of our stock price. If we are unable to mitigate these or other similar risks, our business, results of operations, and financial condition may be adversely affected.

We may not successfully implement our transformation initiatives or fully realize the anticipated benefits from our restructuring efforts. We are in the process of implementing a number of strategic, transformation initiatives intended to redefine our global product management process and portfolio, re-engineer our research and development function and improve our cost structure. As part of these transformation initiatives, during recent fiscal years our management approved restructuring plans to better align our business organization, operations and product lines to achieve long-term sustainable growth and value, including through workforce reduction and facility consolidations. We cannot assure you that we will be able to successfully implement our transformation initiatives. Further, our ability to achieve the anticipated benefits, including the anticipated levels of cost savings and efficiency, of such transformation initiatives and the restructuring plans within expected timeframes is subject to many estimates and assumptions, which are, in turn, subject to significant economic, market, competitive and other uncertainties, some of which are beyond our control. Further restructuring or reorganization activities may also be required in the future beyond what is currently planned, which could further enhance the risks associated with these activities. There is no assurance that we will successfully implement, or fully realize the anticipated positive impact of, our transformation initiatives and the restructuring plans or execute successfully on our transformation strategy, in the timeframes we desire or at all.

If we are unsuccessful in executing on our implementation of payment-related services offerings in new markets and obtaining and maintaining customer acceptance of our service offerings, our net revenues, income and profitability will be adversely affected. A central part of our strategic plan is to increase services offerings so that we can derive higher overall net revenues and margins, develop deeper relationships with our customers and drive more predictable financial results. Following our acquisition of Point, we have been implementing their payment-related services offerings in multiple jurisdictions. Implementing a new services model is difficult and involves management focus, upfront local infrastructure and capital costs and other resources that could otherwise be utilized in research and development of other hardware and software product offerings, and the build-out of local service and support teams. In addition, the competitive environment for services is very different in each market, and the bundle of services

28 2017 10-K being offered must be customized to compete effectively. Markets may take longer to adopt a payment processing model than we anticipate or may choose not to adopt this model at all. We may also be competing against others, including certain of our customers that distribute our terminals, who already offer similar services. Continued weakness in the global economy may also negatively impact our ability to implement payment-related services offerings within the time frames we desire and to achieve the benefits we anticipate. If we are unsuccessful in executing on our implementation of payment-related services offerings and obtaining and maintaining customer acceptance of our service offerings or are unable to implement the model while also maintaining focus on other key areas of our business or if we are unable to maintain the expected level of margins associated with these service offerings, we may not be able to generate sufficient returns on our investments in the services business and our net revenues, income and profitability will be adversely affected.

We have experienced growth in our operations in recent years, and if we cannot manage our expanded operations and also effectively execute on our business strategy, our results of operations will suffer. We have experienced growth in our operations in recent years, both organically and from acquisitions. If we cannot manage our expanded operations to align with our business strategy, which includes maintaining streamlined and efficient operations while effectively meeting the needs of our broader customer base, managing a competitive portfolio of products, and growing our payment services globally in a cost-effective manner, our results of operations will suffer. In particular, we may not be able to attain desired cost-efficiencies and remain competitive, and any measures we may need to undertake to further align our operations with our business strategy may be costly and could adversely impact our results of operations. If we are unable to successfully execute on our business strategy, our results of operations may also be adversely affected. Furthermore, we cannot be sure that we have made adequate allowances for the costs and risks associated with supporting our expanded operations. Any delay in implementing, or transitioning to, new or enhanced systems, procedures, processes or controls to adequately support our expanded operations, including our expansion into a number of additional international markets, including emerging markets, and our growth in payment-related services globally may adversely affect our ability to meet customer requirements, manage our product inventory, and record and report financial and management information on a timely and accurate basis.

From time to time, we engage in acquisitions, divestitures, and other strategic transactions that involve numerous enterprise risks and could disrupt our ongoing business and harm our results of operations. We may not be able to address these risks without substantial expense, delay or other operational or financial problems, and may not realize the expected benefits of our acquisitions. In pursuing our business strategy, we, from time to time, conduct discussions, evaluate opportunities, and complete acquisitions or strategic investments in related businesses, technologies, or products.

The integration of our acquisitions, particularly those that are international in scope, is complex, time- consuming and expensive, and has disrupted, and may continue to disrupt, our business or divert the attention of our management. Achieving the expected benefits of our acquisitions depends in large part on our successful integration of the acquired businesses’ operations and personnel with our own in a timely and efficient manner. We cannot ensure that all of our integration efforts will be completed as quickly as expected or that our past or future acquisitions will achieve any of the expected benefits. These challenges and risks, which are heightened due to the number, size and varying scope of our recently completed acquisitions, include, but are not limited to: • the need to integrate the operations, business systems, and personnel of the acquired business, technology or product, including coordinating the efforts of the sales operations, in a cost-effective manner; • the challenge of managing acquired lines of business, particularly those lines of business with which we have limited operational experience; • the occurrence of multiple product lines or services offerings as a result of acquisitions, that are offered, priced or supported differently, potentially leading to integration delays and customer impact; • the need to integrate or migrate the information technology infrastructures of acquired operations into our information technology systems and resources in an effective and timely manner; • the need to migrate our acquired businesses to our common enterprise resource planning information system and integrating all operations, sales, accounting, human resources and administrative activities for the combined company, all in a scalable, cost-effective and timely manner;

2017 10-K 29 • the need to coordinate research and development and support activities across our existing and newly acquired products and services in a cost-effective manner; • the challenges of incorporating acquired technologies, products and service offerings into our next generation of products and solutions in an effective and timely manner; • the potential disruption of our ongoing business, including the diversion of management attention to issues related to integration and administration; • entering markets in which we have limited prior experience; • in the case of international acquisitions, the need to integrate operations across different jurisdictions, cultures and languages and to address the particular economic, foreign currency, political, legal, compliance and regulatory risks, including with respect to countries where we previously had limited operations; • the possible inability to realize the desired financial and strategic benefits from any or all of our acquisitions or investments in the time frame expected, or at all; • the loss of all or part of our investment; • the loss of customers and partners of acquired businesses; • the failure to retain employees from acquired businesses; • the need to integrate each company’s accounting, legal, management, information, human resource and other administrative systems to enable effective management, and the lack of control if such integration is delayed or unsuccessful; • the need to implement controls, procedures and policies appropriate for a larger public company at companies that prior to acquisition had lacked such controls, procedures and policies and the potential stress on our existing controls, particularly in integrating multiple acquired companies; • the risk that increasing complexity inherent in operating a larger global business and managing a broader range of solutions and service offerings may impact the effectiveness of our internal controls and adversely affect our financial reporting processes; • the failure to adequately identify or assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring a company, which could result in unexpected litigation, unanticipated liabilities, additional costs, unfavorable accounting treatment or other adverse effects; and • the dependency on the retention and performance of key management and employees of acquired businesses for the day-to-day management and future operating results of these businesses.

Our operating results or financial condition may be adversely impacted by pre-existing claims or liabilities, both known and unknown, of these acquired companies, including claims from current or former customers, terminated employees or other third parties; pre-existing contractual relationships of an acquired company that may contain unfavorable terms or that have unfavorable revenue recognition or accounting treatment; and intellectual property claims or disputes. We similarly may be subject to continuing liability associated with businesses that we have disposed of. In addition, the integration process may strain the combined company’s financial and managerial controls and reporting systems and procedures and may result in the diversion of management and financial resources from the combined company’s core business objectives. There can be no assurance that we will successfully integrate our businesses or that we will realize the anticipated benefits of the acquisitions after we complete our integration efforts. If we are not successful in our integration efforts and cannot realize the expected benefits of our acquisitions, we may incur substantial eventual additional expenses and expend resources in connection with divestitures of non-performing businesses.

These risks are heightened and more prevalent in acquisitions of larger businesses, in the event of multiple concurrent acquisitions and integrations, or in businesses involving geographies or business lines in which we may have less experience. Future acquisitions and investments could also result in substantial cash expenditures, potentially dilutive issuances of our equity securities and incurrence of additional debt, contingent liabilities and amortization expenses related to other intangible assets that could adversely affect our business, operating results, and financial condition.

30 2017 10-K We may not be able to attract, integrate, manage, and retain qualified personnel. Our success depends to a significant degree upon the continued contributions of our key senior management, engineering, sales and marketing, supply chain, and other specialized personnel, many of whom would be difficult to replace. In addition, our future success depends on our ability to attract, integrate, manage, and retain highly skilled employees throughout our business. Competition for some of these personnel is intense in certain markets, especially in the Silicon Valley where our corporate headquarters are located, and competitive pressures in such markets can drive up wages, impacting our profitability. In addition, shifts in U.S. immigration policy, including as a result of the 2016 U.S. presidential election, could negatively impact our ability to attract, hire and retain highly skilled employees who are from outside the United States. In the past we have had difficulty hiring, in our desired time frame and in our desired markets, employees that have the specific qualifications required for a particular position. In particular, we may be unsuccessful in attracting and retaining personnel as a result of the workforce reduction measures we have implemented or may implement in the future. To help attract, retain and motivate qualified personnel, we use share-based incentive awards, such as employee stock options and restricted stock units as well as cash-based incentive awards tied to our performance. If the Company’s overall performance is poor, the value of our stock awards does not appreciate as measured by the performance of the price of our common stock, or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, employee incentive awards and morale could be negatively impacted and our ability to attract, retain and motivate personnel could be weakened. The loss of the services of any of our key personnel, the inability to attract or retain qualified personnel in the future, or delays in hiring required personnel, particularly engineers and sales personnel, could make it difficult for us to manage our business and meet key objectives, such as timely product introductions, and our business and profitability may suffer.

We depend on distributors and resellers to sell a significant portion of our solutions. If we do not effectively manage our relationships with them, our net revenues and results of operations could suffer. We sell a significant portion of our solutions through third-party resellers such as independent distributors, ISOs, value-added resellers, and payment processors. We depend on their active marketing and sales efforts. These resellers also provide after-sales support and related services to end user customers, and generally have valuable knowledge and experience with the customer base in the territories they serve. These resellers also provide critical services of developing and supporting the software applications to run on our various electronic payment systems and, internationally, in obtaining requisite certifications in the markets in which they are active. Accordingly, the pace at which we are able to introduce new solutions in markets in which these resellers are active depends in part on the resources they dedicate to these tasks. Moreover, our arrangements with these resellers typically do not prevent them from selling products of other companies, including our competitors, and such resellers may elect to market our competitors’ products and services in preference to our system solutions. In addition, we may offer similar services as those offered by certain of our resellers as we introduce payment- related services offerings in new markets. If one or more of our major resellers terminate their relationship with us, are acquired by one of our competitors or one of our competitor’s resellers, or otherwise adversely change their relationship with us, we may be unsuccessful in replacing such relationship. The loss of any of our major resellers could impair our ability to sell our solutions and result in lower net revenues and income. It could also be time- consuming and expensive to replicate, either directly or through other resellers, the certifications and the applications developed by these resellers.

In addition, orders from our distributors and resellers depend on their sales volumes and inventory management decisions. We have experienced, and may in future periods experience, a significant decrease in our net revenues based on the timing of orders from our distributors, which generally varies based on distributor decisions on managing inventory levels, desired product mix and timing of new product introductions. Declines or deferrals of orders could materially and adversely affect our net revenues, operating results and cash flows.

We depend on a limited number of customers, including distributors and resellers, for a large percentage of our net revenues. If we do not effectively manage our relationships with them, our net revenues and operating results could suffer. A significant percentage of our net revenues is attributable to a limited number of customers, including distributors and ISOs. If we are not able to adequately and timely respond to demands for new or additional

2017 10-K 31 products or features from any of our large customers, that customer may decide to reduce its order or not to purchase from us at all, which could have a material adverse effect on our business and results of operations. Our net revenues are dependent in part on the timing of purchases by our large customers. If any of our large customers significantly reduces or delays purchases from us or if we are required to sell products to them at reduced prices or on other terms less favorable to us, our net revenues, profitability, cash flows and net income could be materially and adversely affected.

Timing for orders for our products and services can be back-end weighted within the fiscal quarter, which can make our net revenues difficult to predict and can negatively impact our business and results of operations. The timing of our customer orders and related net revenues are often back-end weighted, meaning that during a particular fiscal quarter, a substantial portion of sales orders may be received, substantial product may be shipped, and substantial revenue may be recognized in the last month of the fiscal quarter. Timing of customer orders and related net revenues often become more back-end weighted during economic downturns or periods of uncertainty, as well as in markets where there is uncertainty related to acceptance and/or implementation of our products, such as that related to changes or potential changes in regulations or other local requirements that impact deployment of our products. These effects can also be exacerbated in markets where we depend on a limited number of customers, and where one or a few customers’ decisions can have a significant impact on our results of operations in the fiscal quarter. Such back-end loading can also adversely affect our business and results of operations due to a number of additional factors including the following: • the manufacturing processes at our third-party contract manufacturers could become concentrated in a shorter time period. This concentration of manufacturing could increase manufacturing costs, such as costs associated with the expediting of orders, and negatively impact our gross margins. The risk of higher levels of obsolete or excess inventory write-offs would also increase if we were to hold higher inventory levels to counteract this effect; • the higher concentration of orders may make it difficult to accurately forecast component requirements and, as a result, we could experience a shortage of the components needed for production, possibly delaying shipments and causing lost orders; • if we are unable to fill orders at the end of a quarter, shipments may be delayed. This could cause us to fail to meet our revenue and operating profit expectations for a particular quarter and could increase the fluctuation of quarterly results if shipments are delayed from one fiscal quarter to the next or orders are canceled by customers; and • in order to fulfill orders at the end of a quarter, we may be forced to deliver our products using air freight which would result in increased distribution costs.

These factors can cause our net revenues to fluctuate and be difficult to predict in any given fiscal quarter. Any failure to meet our or analysts’ revenue or operating profit expectations for a particular quarter could cause the market price of our stock to decline.

If we do not accurately forecast customer demand and effectively manage our product mix and inventory levels, we may lose sales from having too few or the wrong mix of products or incur costs associated with excess inventory. If we inaccurately forecast demand for our products, we could end up with either excess or insufficient inventory to satisfy demand. This problem is exacerbated because our products are offered in a number of different configurations and with a variety of optional features, and we generally receive a significant volume of customer orders towards the end of each fiscal quarter which leaves us little room to adjust inventory mix to match demand, as discussed under “Timing for orders for our products and services can be back-end weighted within the fiscal quarter, which can make our net revenues difficult to predict and can negatively impact our business and results of operations.” During the transition from an existing product to a new replacement product, we must accurately predict the demand for the existing and the new product. Furthermore, introducing new products into our current markets or existing products into new markets involves the uncertainty of whether the market will adopt our product in the volumes and time frames that we anticipate or at all. Our inability to properly manage our inventory levels could lead to increased expenses associated with writing off excessive or obsolete

32 2017 10-K inventory, additional shipping costs to meet immediate demand and a corresponding decline in gross margins, or lost sales. If we do not accurately predict demand, we could also incur increased expenses associated with binding commitments to certain third-party contract manufacturers and suppliers which would negatively impact our gross margins and operating results. For example, as of October 31, 2017, the amount of purchase commitments issued to contract manufacturers and component suppliers totaled approximately $113.5 million. Of this amount, $8.3 million was recorded in Accruals and other current liabilities in our Consolidated Balance Sheets because these commitments were not expected to have future value to us. On April 3, 2017, to lock in pricing on certain components, we committed to purchase $144 million of such components over a four year period, $36 million per year, from one of our existing suppliers. As of October 31, 2017, our remaining non-cancelable commitment under this agreement totaled $103.9 million.

For additional information regarding our commitments to third-party manufacturers and suppliers, see Note 13, Commitments and Contingencies, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

During times of economic uncertainty, such as the global economic recession that continues to impact certain parts of Europe, it becomes more difficult to accurately forecast demand and manage our inventory levels. Deteriorating market conditions have in the past and can in future periods cause us to incur additional costs associated with excess and obsolete inventory, scrap, and excess inventory held by our contract manufacturers.

We may accumulate excess or obsolete inventory that could result in unanticipated price reductions and write-downs and adversely affect our financial condition. In formulating our solutions, we have focused our efforts on providing our customers with solutions that have high levels of functionality, which requires us to develop and incorporate new and evolving technologies. This approach tends to increase the risk of obsolescence for products and components we hold in inventory and may compound the difficulties posed by other factors that affect our inventory levels, including the following: • maintaining significant inventory of components that are in limited supply; • buying components in bulk for better pricing; • entering into purchase commitments based on early estimates of quantities for longer lead time components; • responding to the unpredictable demand for products; • cancellation of customer orders; • responding to customer requests for quick delivery schedules; and • timing of end-of-life decisions regarding products.

The accumulation of excess or obsolete inventory has in the past resulted in and may in future periods result in price reductions and inventory write-downs and scrap, which could, sometimes materially, adversely affect our business, results of operations and financial condition.

We are exposed to credit risk with some of our customers and to credit exposures and currency controls in certain markets, which could result in material losses. A significant portion of our net revenues are on an open credit basis, with typical payment terms of up to 60 days in the U.S. and longer in some international markets due to local customs or conditions. In the past, there have been bankruptcies among our customer base. Credit risks may be higher and collections may be more difficult to enforce in emerging markets where we conduct business, including for example where the market for our products and solutions is still developing and their acceptance uncertain, and future losses, if incurred, could harm our business and have a material adverse effect on our operating results and financial condition. Also, certain customers that are invoiced in U.S. dollars, such as those based in Venezuela and Nigeria and other countries whose economies are significantly impacted by the price of oil, have experienced, and may continue to experience, difficulties in obtaining U.S. dollars due to local currency controls, and therefore may not be able to remit timely payment to us. Additionally, instability or uncertainty in global or regional economic, political or military conditions may make it more difficult for some customers to obtain financing or access U.S. dollar currency, and their ability to pay could be adversely impacted, which in turn could have a material adverse impact on our business, cash flows, operating results and financial condition.

2017 10-K 33 We depend upon third parties to manufacture our systems and to supply the components necessary to manufacture our products, and in some cases we are dependent upon sole source suppliers to manufacture our systems. We utilize a limited number of third parties to manufacture our hardware products pursuant to our specifications and rely upon these contract manufacturers to produce and deliver products on a timely basis and at an acceptable cost or to otherwise meet our product demands. Further, a material portion of these third-party manufacturing activities are concentrated in China. Disruptions to the business, financial stability or operations, including due to strikes, labor disputes or other disruptions to the workforce, of these contract manufacturers, or to their ability to produce the products we require in accordance with our and our customers’ requirements, and particularly disruptions to the manufacturing operations in China including due to geological disruptions such as earthquakes, could significantly affect our ability to fulfill customer demand on a timely basis which could materially harm our net revenues and results of operations. Substantially all of our manufacturing is currently handled by our third-party contract manufacturers and our dependency on our third-party contract manufacturers could exacerbate these risks.

Components such as application specific integrated circuits, or ASICs, microprocessors, wireless modules, modems, and printer mechanisms that are necessary to manufacture and assemble our systems are sourced either directly by us or on our behalf by our contract manufacturers from a variety of component suppliers selected by us. Certain of the components are specifically customized for use in our products and are obtained from sole source suppliers on a purchase order basis. Disruptions to the business, financial stability or operations, including due to strikes, labor disputes or other disruptions to the workforce, of our suppliers, and particularly sole source suppliers, or to the distribution and transportation of our products may also impact the availability of components to us in the quantities or within the timeframe we require. Any prolonged component shortage could materially and adversely affect our business and results of operations. Component shortages have resulted in increased costs for certain components and continued cost increases due to shortages or other factors could negatively impact our gross margins and profitability. If our suppliers are unable or unwilling to deliver the quantities that we require within the timeframe that we require, we would be faced with a shortage of components. We also experience from time to time an increase in the lead time for delivery of some of our key components. We may not be able to find alternative sources in a timely manner if suppliers of our key components become unwilling or unable to provide us with adequate supplies of these key components when we need them or if they increase their prices. If we are unable to obtain sufficient key required components, or to develop alternative sources if and as required in the future, or to replace our component and factory tooling for our products in a timely manner if they are damaged or destroyed, we could experience delays or reductions in product shipments. This could harm our relationships with our customers and cause our net revenues to decline. Even if we are able to secure alternative sources or replace our tooling in a timely manner, our costs could increase. Any of these events could adversely affect our results of operations.

Shipments of electronic payment systems may be delayed by factors outside of our control, which can harm our reputation and our relationships with our customers. The shipment of payment systems requires us or our manufacturers, distributors, or other agents to obtain customs or other government certifications and approvals, and, on occasion, to submit to physical inspection of our systems in transit. Failure to satisfy these requirements, and the very process of trying to satisfy them, can lead to lengthy delays in the delivery of our solutions to our direct or indirect customers. Because we depend upon third-party carriers for the timely delivery of our products we may face delays in delivery due to reasons outside our control. Delays and unreliable delivery by us may harm our reputation in the industry and our relationships with our customers and result in canceled orders, any of which could adversely affect our results of operations and business.

We may be subject to future impairment charges due to potential declines in the fair value of our assets. As a result of our acquisitions, particularly that of Lipman in November 2006, Hypercom in August 2011, Point in December 2011, as well as acquisitions related to our Taxi Solutions, we have recorded significant goodwill and intangible assets on our balance sheet. We test goodwill and intangible assets for impairment on a periodic basis as required, and whenever events or changes in circumstances indicate that the carrying value

34 2017 10-K may not be recoverable. The events or changes that could require us to test our goodwill and intangible assets for impairment include a reduction in our stock price and market capitalization and changes in our estimated future cash flows or changes in rates of growth in our industry or in any of our reporting units or lines of business.

During the first quarter of 2016, we realigned our organizational structure and changed our reportable segments to be Verifone Systems and Verifone Services. As a result of this change, we realigned our reporting units to be Verifone Systems, Taxi Solutions, and Verifone Services. During the second quarter of 2017, we concluded that the carrying amount of the goodwill related to our former Taxi Solutions reporting unit may not be recoverable. Based on a quantitative assessment, considering potential sales transactions, we concluded that the goodwill was impaired by $17.4 million. There were no indicators of impairment for our Verifone Systems and Verifone Services reporting units during the fiscal year ended October 31, 2017.

Our evaluation of potential impairment of goodwill is subjective, requires significant judgment and could be negatively affected by a variety of factors, including declines in our stock price, failure to meet our internal forecasts, and weakening of macroeconomic conditions or significant changes in management structure or business strategies. If we determine in the future that there is potential further impairment in any of our reporting units, we may be required to record additional charges to earnings, which could materially and adversely affect our financial results and could also materially and adversely affect our business. See Note 10, Goodwill and Purchased Intangible Assets, in the Notes to Consolidated Financial Statements and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates — Goodwill, of this Annual Report on Form 10-K for additional information related to impairment of goodwill and intangible assets.

We have operations in Israel and therefore our results of operations may be adversely affected by political or economic instability or military operations in or around Israel. We have offices and personnel in Israel. Therefore, political, economic, and military conditions in Israel directly affect our operations. The outcome of peace efforts between Israel and its Arab neighbors remains uncertain. Any armed conflicts, such as ongoing military conflict in the Gaza Strip, or further political instability in the region is likely to negatively affect business conditions and materially harm our results of operations. Furthermore, several countries continue to restrict or ban business with Israel, Israeli companies and companies with significant Israeli operations. These restrictive laws and policies may seriously limit our ability to make sales in those countries.

In addition, many employees in Israel are obligated to perform between 30 to 40 days of military reserve duty annually and are subject to being called for active duty under emergency circumstances. If a military conflict arises, these individuals could be required to serve in the military for extended periods of time. Our operations in Israel could be disrupted by the absence for a significant period of one or more key employees or a significant number of other employees due to military service. Any disruption in our operations in Israel could materially and adversely affect our business.

We have operations and business in Turkey that may be adversely affected by political and economic instability in the country and military operations in the region. In July 2016, there was an attempted military coup in Turkey. In the aftermath of the coup, some of our partners and customers delayed shipments and orders, impacting our revenues. While the current government was able to stay in power, the country continues to experience political turmoil and the Turkish government is operating under a state of emergency. This evolving situation could further negatively impact our results and business opportunities in the country, including our ability to market certain solutions in the region. For example, the Turkish government has delayed implementation of a fiscalization mandate to January 2018. This may further impact or delay our business opportunities and revenue expectations in the country for the next fiscal year.

Force majeure events, such as terrorist attacks, other acts of violence or war and political instability may adversely affect us. Terrorist attacks, war, and international political instability may impact our operations, our customers and otherwise disrupt our ability to generate net revenues. Such events may negatively affect our ability to maintain

2017 10-K 35 net revenues and to develop new business relationships. Because a substantial and growing part of our net revenues is derived from sales and services to customers outside of the U.S. and we have our electronic payment systems manufactured outside the U.S., terrorist attacks, war, and international political instability anywhere may decrease international demand for our products and inhibit customer development opportunities abroad, disrupt our supply chain, and impair our ability to deliver our electronic payment systems, which could materially and adversely affect our net revenues or results of operations. Economic and political instability, particularly in the Middle East or OPEC member countries, may also disrupt the production or supply of fuel which could increase our costs related to shipment and distribution of our products. Any of these events may also disrupt global financial markets and precipitate a decline in the price of our stock. See also “Sanctions against Russia, and Russia’s response to those sanctions, including the imposition of sanctions by Russia, could materially adversely affect our business, results of operations and financial condition”, “We have operations in Israel and therefore our results of operations may be adversely affected by political or economic instability or military operations in or around Israel” and “We have operations and business in Turkey that may be adversely affected by political and economic instability in the country and military operations in the region.”

Natural or man-made disasters, business interruptions and health epidemics could delay our ability to receive or ship our products or provide our services, or otherwise disrupt our business. Our worldwide operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, health epidemics, and other natural or man-made disasters or business interruptions, all of which could impact our ability to conduct vital business operations, including the ability of our employees to access work sites or customer sites where urgent or time critical repairs are needed. The occurrence of any of these business disruptions could seriously harm our business, our revenue and financial condition, and increase our costs and expenses. If our or our manufacturers’ facilities are damaged or destroyed, we would be unable to distribute our products or provide our services on a timely basis, which could harm our business. Our corporate headquarters, and a portion of our research and development activities, are located in California, and other critical business operations and some of our suppliers are located in California and Asia, near major earthquake faults. Certain key servers and information systems as well as a shared services center are located in Florida, which has in the past experienced major hurricanes and similar extreme weather. Any disruption of our operations in these areas could materially affect our operations and harm our business. In addition, we increasingly rely on our computer systems and servers to conduct our business. For example, much of our order fulfillment process is automated and the order information is stored on our servers. If our computer systems and servers are impaired or cease functioning, even for a short period, our ability to serve our customers and fulfill orders would be disrupted, our reputation could be damaged and our net revenues could be materially and adversely affected. Moreover, if our computer information systems or communication systems, or those of our vendors or customers, are subject to hacker attacks or other disruptions, our business could suffer. Although we have established and tested back-up systems and facilities to run our critical business operations in case of a business interruption, some of our systems and facilities are not yet fully redundant or fully tested. We are still in the process of finalizing a comprehensive disaster recovery plan and continue to rely on regional disaster recovery plans in some cases. In addition, our back-up operations may be inadequate under certain circumstances and our business interruption insurance may not be enough to compensate us for any losses that we may incur, which could adversely affect our business, results of operations and financial condition, as well as harm our reputation, and could cause our stock price to decline significantly.

Risks Related to Our Legal and Regulatory Environment Our results of operations will suffer if we cannot comply with industry and government regulations and standards, or if changing standards do not continue to drive upgrade cycles. Our systems must meet industry standards imposed by payment systems standards setting organizations such as EMVCo LLC, credit card associations such as Visa, MasterCard, and other credit card associations and standard setting organizations such as PCI SSC, Intermec and the U.K. Cards Association and other local organizations. New standards are continually being adopted or proposed as a result of worldwide anti-fraud initiatives, encryption of cardholder data, the increasing need for system compatibility and technology developments such as wireless and wireline IP communication. Our solutions also must comply with government regulations, including those imposed by telecommunications authorities and independent standards groups worldwide regarding emissions, radiation, and connections with telecommunications and radio networks, as well

36 2017 10-K as data privacy laws and regulations which regulate the collection, compilation, aggregation, sharing or use of consumer information. We cannot be sure that we will be able to design our solutions to comply with future standards or regulations on a timely basis, if at all. Compliance with these standards could increase the cost of developing or producing our solutions. New products designed to meet any new standards need to be introduced to the market and ordinarily need to be certified by the credit card associations and our customers and, in some cases, local certification bodies, before being purchased. These certification processes are costly and time consuming and increase the amount of time it takes to introduce new products and sell our products. Our business has been in the past and continues to be adversely affected by our failure to timely obtain local certifications in some markets for certain of our products. Moreover, certain uses of our products may subject us to additional regulations and licensing requirements. Various aspects of our services business also are or may be subject to additional regulations and licensing requirements as we expand into new areas. Our business, net revenues and financial condition could be adversely affected if we cannot comply with new or existing industry standards, or obtain or retain necessary regulatory approval or certifications in a timely fashion, or if compliance results in increasing costs of our products. Selling products that are non-compliant may result in fines against us or our customers, which we may be liable to pay. In addition, even if our products are designed to be compliant, compliance with certain security standards is determined based on the merchant’s or service provider’s network environment in which our systems are installed and, therefore, is dependent upon a number of additional factors such as proper installation of the components of the environment including our systems, compliance of software and system components provided by other vendors, implementation of compliant security processes and business practices and adherence to such processes and practices. Our business and financial condition, as well as our reputation and market share, could be adversely affected if we do not comply with new or existing industry standards and regulations, or obtain or retain necessary regulatory approval or certifications in a timely fashion, or if compliance results in increasing costs of our products.

On the other hand, our business also benefits from changes in industry standards and government regulations as well as technological changes, which are large drivers of customer upgrade cycles. For example, as EMV standards were implemented in the U.S., our business benefited as customers upgraded their systems. Nevertheless, if standards are not implemented on the timeline we expect, or at all, if they are implemented but we cannot deliver products that comply with standards in a timely manner or at all, or if the pace of adoption of EMV or other standards slows, our business will suffer. If customers do not continue to upgrade their terminals due to technological changes or changes in standards or government regulations, demand for our offerings could reach a saturation point, which would adversely affect our results of operations.

Changes in laws and regulations of privacy and protection of user data could adversely affect our business. We are subject to data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of proprietary information and personally-identifying information. The regulatory environment surrounding information security and data privacy varies from jurisdiction to jurisdiction and is constantly evolving and increasingly demanding. The restrictions imposed by such laws continue to develop and may require us to incur substantial costs, adopt additional compliance measures, such as notification requirements and corrective actions in the event of a security breach, and/or change our current or planned business models. For example, in the U.S., legislation has in recent years been proposed regarding restrictions on the use of geolocation information collected by mobile devices without consumer consent. If ultimately adopted, such legislation or any other restrictions imposed on use of location-based information or geolocation tracking could impact our implementation of mobile-based payments solutions that utilize such information or technology. In addition, we are already subject to strict data privacy laws in the European Union and other jurisdictions governing the collection, transmission, storage and use of employee data and personally-identifying information. The General Data Protection Regulation (GDPR), coming into effect in Europe in May 2018, creates a range of new compliance obligations and increases financial penalties for non-compliance and extends the scope of the European Union data protection law to all companies processing data of European Union residents, regardless of the company’s location. The GDPR and other privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements. Such regulations increase our compliance and administrative burden significantly.

If our current security measures and data protection policies and controls are found to be non-compliant with relevant laws or regulations in any jurisdiction where we conduct business, we may be subject to penalties and

2017 10-K 37 fines, and may need to expend significant resources to implement additional data protection measures. In addition, we may be required to modify the features and functionality of our system offerings in a way that is less attractive to customers.

We are party to a number of lawsuits and tax assessments and we may be named in additional litigation and assessments, all of which are likely to require significant management time and attention and expenses and may result in unfavorable outcomes that could have a material adverse effect on our business, financial condition, results of operations and cash flows. We are currently a party in several litigation proceedings. If any of these proceedings are resolved adversely to us, this could have a material adverse effect on our business, financial condition, results of operations or cash flows. For example, in connection with the restatement of our historical interim financial statements during fiscal year 2007, a number of securities class action complaints were filed against us and certain of our officers, and purported derivative actions were also filed against certain of our current and former directors and officers. As described in Part I, Item 3, Legal Proceedings, of our Annual Report on Form 10-K for the fiscal year ended October 31, 2014, we settled with the plaintiffs in the securities class action case caption In re VeriFone Holdings, Inc. Securities Litigation for a total of $95.0 million.

We are also subject to a number of pending tax assessment matters, particularly in Brazil where such assessments can be difficult to defend and result in substantial losses, and in Israel, where we are currently under audit by the Israel Tax Authority for fiscal years 2011 through 2015 and are subject to a substantial potential tax liability and deficiency penalty assessment in the range of several hundred million dollars for our fiscal years 2008 or 2009. While we continue to believe the Israel Tax Authority assessment is without merit and have appealed the assessment, we cannot be sure of the outcome and our ultimate aggregate exposure. See Note 6, Income Taxes and Note 13, Commitments and Contingencies, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for additional information related to tax assessment matters.

Further, our operating results or financial condition may also be adversely impacted by claims or liabilities that we assume from an acquired company or that are otherwise related to an acquisition. For example, in connection with our acquisition of Hypercom, we have, except for certain matters related to the businesses divested by Hypercom, generally assumed all of Hypercom’s litigation proceedings and tax assessments, and may also be liable for certain matters arising after closing of the Hypercom divestitures but related to pre-closing operations.

We also are subject to the risk of additional litigation and regulatory proceedings or actions in connection with the restatement of our financial statements. We have responded to inquiries and provided information and documents related to the restatement to the SEC, the U.S. Department of Justice, the New York Stock Exchange, and the Chicago Board Options Exchange. We were the subject of a Wells Notice from the SEC stating that the staff of the SEC’s Division of Enforcement intended to recommend that the SEC bring a civil injunctive action against us, alleging violations of the federal securities laws arising from the restatement, which we settled in November 2009. Although we have settled this matter with the SEC, additional regulatory inquiries may also be commenced by other U.S. federal, state or foreign regulatory agencies. In addition, we may in the future be subject to additional litigation or other proceedings or actions arising in relation to the restatement of our historical interim financial statements.

Furthermore, we are, and in the future may be, involved in various litigation and regulatory matters, such as commercial disputes and labor and employment claims, that arise in the ordinary course of business.

Our insurance policies may not cover certain claims that are filed against us or may not be sufficient to cover all of our costs for defending such actions or paying any damages in the event of an unfavorable outcome. In addition, we may be obligated to indemnify (and advance legal expenses to) both current and former officers, employees and directors in connection with the securities class action and derivative action matters. Although we currently hold insurance policies for the benefit of our directors and officers, such insurance coverage may not be sufficient in some or all of these matters. Furthermore, our insurance carriers may seek to deny coverage in some or all of these matters, in which case we may have to fund the indemnification amounts owed to such directors and officers ourselves. Because we have a number of pending litigation matters, these amounts may be material.

The amount of time and resources required to resolve these lawsuits is unpredictable, and defending ourselves is likely to divert management’s attention from the day-to-day operations of our business, which could

38 2017 10-K adversely affect our business, financial condition, and results of operations. We have in the past incurred and expect to continue to incur significant expenses in connection with these matters. Many members of our senior management team and our Board of Directors have devoted and may be required to devote additional time to our pending litigation matters. Certain of these individuals are named defendants in the litigation related to the restatement actions. If our senior management is unable to devote sufficient time in the future to developing and pursuing our strategic business initiatives and running ongoing business operations, there may be a material adverse effect on our business, financial condition and results of operations.

The outcome of litigation and tax assessments is inherently difficult to predict. If any such litigation or tax assessment is resolved adversely to us (whether as a result of a court judgment or a decision by us to settle litigation to avoid the distraction, expense and inherent risks of continued litigation), this could have a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, even when we are able to reasonably estimate the probable loss and thus record an accrual for such probable and reasonably estimable loss contingency, the accrual may change due to new developments or changes in our estimates or the amount of our liability could exceed the accrual. For a description of our material pending litigation, see Part I, Item 3, Legal Proceedings, of this Annual Report on Form 10-K.

Our business may suffer if we are sued for infringing the intellectual property rights of third parties, or if we are unable to obtain rights to third-party intellectual property on which we depend. Third parties have in the past asserted and may in the future assert claims that our products and services infringe their proprietary rights. Such infringement claims, even if meritless, may cause us to incur significant costs in defending against or settling those claims, whether directly or as a result of indemnification obligations. We may be required to discontinue using and selling any infringing technology and services, to expend resources to develop non-infringing technology or to purchase licenses or pay royalties for other technology. Similarly, we depend on our ability to license intellectual property from third parties. The third parties from whom we license technology may become unwilling to license to us on acceptable terms intellectual property that is necessary to our business. In addition, we may be unable to acquire licenses for other technology necessary for our business on reasonable commercial terms or at all. As a result, we may be unable to continue to offer the solutions and services upon which our business depends.

We have received, and have currently pending, third-party infringement claims and may receive additional notices of claims of infringement in the future. As we expand into other payment technologies and as competition in this area increases, it is possible that the rate at which third parties bring claims will increase. Infringement claims may cause us to incur significant costs in defending against those claims or to settle claims to avoid costly or protracted litigation even if we believe those claims are without merit. Claims may result in additional protracted and costly litigation. There can be no assurance that we will prevail in any such actions or that any license required under any such patent or other intellectual property would be made available on commercially acceptable terms, if at all. An unfavorable outcome in any such litigation could result in a significant judgment of damages against us, which could materially and adversely impact our operating results, financial condition and cash flows. See Note 13, Commitments and Contingencies, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

Our proprietary technology is difficult to protect and unauthorized use of our proprietary technology by third parties may impair our ability to compete effectively. We may not be able to protect our proprietary technology, which could enable competitors to develop services that compete with our own. We rely on patent, copyright, trademark, and trade secret laws, as well as confidentiality, licensing and other contractual arrangements to establish and protect the proprietary aspects of our solutions. Institution of legal proceedings to enforce our intellectual property rights could be costly and divert the efforts and attention of our management and technical personnel from other business operations. In addition, there can be no assurance that such proceedings would be determined in our favor. We do not have patent protection for certain important aspects of our current solutions. The laws of some countries in which we sell our solutions and services may not protect software and intellectual property rights to the same extent as the laws in the United States. If we are unable to prevent misappropriation of our proprietary technology, competitors or others may be able to use and adapt such technology, which could diminish our competitive advantage and cause us to lose customers to competitors.

2017 10-K 39 Our business and results of operations may be adversely affected if we do not comply with legal and regulatory requirements that apply to our products, including environmental laws and regulations that regulate substances contained in our products. We may be subject to various other legal and regulatory requirements related to the manufacture and sale of our products, such as a European Union directive that places restrictions on the use of hazardous substances (RoHS and RoHS2) in electronic equipment, a European Union directive on WEEE, the European Union’s REACH, and the environmental regulations under China RoHS. RoHS and RoHS2 sets a framework for producers’ obligations in relation to manufacturing (including the amounts of named hazardous substances contained in products sold) and WEEE sets a framework for treatment, labeling, recovery, and recycling of electronic products in the European Union which may require us to alter the manufacturing of the physical devices that include our solutions and/or require active steps to promote recycling of materials and components. REACH imposes chemicals regulation and controls including requirements for registration of chemicals on the European Union market. In addition, similar legislation could be enacted in other jurisdictions, including in the U.S. where many states have already enacted state-level programs and requirements for recycling of certain electronic goods. In addition, climate change legislation in the U.S. is a significant topic of discussion and may generate federal or other regulatory responses in the near future. If we do not comply with environmental law and regulations, we may suffer a loss of revenue, be unable to sell in certain markets or countries, be subject to penalties and enforced fees, and/or suffer a competitive disadvantage. Customers may impose certain requirements or levels of compliance due to these regulations and programs that may increase our costs of doing business. Furthermore, the costs to comply with RoHS, RoHS2, WEEE, REACH and China RoHS, or with current and future environmental and worker health and safety laws may have a material adverse effect on our business, results of operations and financial condition.

In 2012, the SEC adopted rules pursuant to Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring disclosure of the use of certain minerals that are mined from the Democratic Republic of Congo and adjoining countries. We filed our most recent report under the disclosure requirement in May 2017 for the 2016 calendar year. Because our supply chain is complex, in preparation of such report, we were dependent on the implementation of diligence procedures we put in place to determine the sources of conflict minerals that may be used or are necessary to the production of our products and, if applicable, potential changes to products, processes or sources of supply in response to the findings resulting from such verification activities, as well as information provided by many of our suppliers. To the extent the information we received from our suppliers is inaccurate or inadequate or our processes in obtaining such information do not satisfy the SEC’s diligence requirements, we may be unable to sufficiently verify the origins of conflict minerals used in our products and could face reputational risks. In addition, we have incurred and expect to continue to incur costs associated with complying with these disclosure requirements, including for conducting diligence procedures. Moreover, these rules could adversely affect the sourcing, supply and pricing of materials used in our products, particularly if the number of suppliers offering minerals identified as “conflict minerals” that are sourced from locations other than the Democratic Republic of Congo and adjoining countries is limited. We may also suffer reputational harm if we determine that certain of our products contain minerals not determined to be conflict-free yet are unable to alter our products, processes or sources of supply to avoid such materials.

Changes in our effective tax rate could adversely affect our results of operations. Our effective tax rate could be adversely affected by a number of factors, including shifts in the mix of pretax profits and losses by tax jurisdiction, loss or cessation of tax holidays or other tax benefits, our ability to generate tax credits, our ability to utilize net operating loss carryforwards, the tax impact of nondeductible compensation, and changes in accounting rules, tax laws and regulations, and related interpretations, in the jurisdictions in which we operate. The U.S., countries in the European Union and other countries where we do business have been considering changes in tax laws applicable to multinational corporations. These potential changes in tax laws could have an adverse effect on our effective tax rate. For example, the recent proposals for fundamental U.S. and international tax reform and any changes in laws resulting from the Base Erosion and Profit Shifting project being conducted by the Organization for Economic Cooperation and Development, along with other significant policy initiatives, could have a material impact on us.

We are subject to ongoing tax audits in various jurisdictions. Although we regularly assess the likely outcomes of such audits in order to determine the appropriateness of our tax provision, such assessments involve

40 2017 10-K significant judgment and there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our net income or financial condition. We have not provided for U.S. federal and state income taxes or foreign withholding taxes that may result from future remittances of undistributed earnings of our foreign subsidiaries. Any changes to these factors could have an adverse effect on our results of operations.

We have previously received tax benefits related to our operations in Israel and Singapore. Our subsidiary in Israel (formerly Lipman) previously received tax benefits under Israeli law for capital investments that were designated as “Approved Enterprises” through October 31, 2009. To the extent that these prior year earnings are distributed or deemed distributed, our Israeli subsidiary could be required to remit corporate income tax on these earnings at the applicable rate, between 12.5% and 36.25%. In addition, our subsidiary in Singapore previously received tax benefits under the Singapore Pioneer Tax Holiday provision (the “Tax Holiday”) which expired on October 31, 2012. Our effective tax rate could be adversely affected to the extent that tax authorities in Singapore challenge our Tax Holiday.

The value of our deferred tax assets may not be realizable to the extent our future profits are less than we have projected and we may be required to record valuation allowances against previously-booked deferred tax assets, which may have a material adverse effect on our results of operations and our financial condition. Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carry-forwards and net operating losses. We evaluate the realizability of our deferred income tax assets and assess the need for a valuation allowance on an ongoing basis. In evaluating our deferred income tax assets, we consider whether it is more likely than not that the deferred income tax assets will be realized. The ultimate realization of our deferred income tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences become deductible and before our capital loss carry-forwards and net operating losses expire. Our assessment of the realizability of our deferred income tax assets requires significant judgment. If we fail to achieve our projections or if we need to lower our projections, we may not have sufficient evidence of our ability to realize our deferred tax assets, and we may need to increase our valuation allowance. For example, for the fiscal year ended October 31, 2013 we recorded a $245.0 million valuation allowance against a significant portion of our deferred tax assets, primarily in the U.S., because our three year cumulative U.S. pretax losses raised uncertainty about the likelihood of realization of those deferred tax assets. If U.S. tax rates are reduced, the value of our U.S. deferred tax asset would decrease and the associated valuation allowance would also decrease. For further information regarding this valuation allowance, see Note 6, Income Taxes, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. There is no assurance that we will not record a valuation allowance in future periods against previously-booked deferred tax assets. Any increase in the valuation allowance would result in additional income tax expense which could have a material adverse effect on our results of operations and financial condition.

Our internal processes and control over financial reporting have in prior periods been deemed inadequate. In certain prior periods we reported material weaknesses in our internal control over financial reporting, which we have remedied. These material weaknesses in our internal control over financial reporting contributed to our need to restate previously reported interim financial information for each of the first three quarters of our fiscal year ended October 31, 2007, and to the delays in the filing of our Annual Report on Form 10-K for fiscal year 2007. We also were unable to file our quarterly reports on Form 10-Q for our fiscal quarters ended January 31, 2008 and April 30, 2008 on a timely basis.

Although we have implemented improved controls and remedied these material weaknesses, these controls may not be sufficient to detect or prevent errors in financial reporting in future periods and will require continued enhancement to accommodate our rapid growth in operations both organically and from acquisitions. We may hire additional employees and may also engage additional consultants in these and other key areas. Competition for qualified financial control and accounting professionals in the geographic areas in which we operate is intense and there can be no assurance that we will be able to hire and retain these individuals.

2017 10-K 41 Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting. The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management continually reviews the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weakness, in our internal control over financial reporting that may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in the price of our securities, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.

Risks Related to Our Capital Structure Our secured credit facility contains restrictive and financial covenants. If we are unable to comply with these covenants, we will be in default. A default could result in the acceleration of our outstanding indebtedness, which would have an adverse effect on our business and stock price. We have senior secured credit facilities pursuant to a credit agreement as described in Note 11, Financing,in the Notes to Consolidated Financial Statements to this Annual Report on Form 10-K, with outstanding loan balances of $826.9 million as of October 31, 2017.

The Credit Agreement contains customary covenants that require maintenance of certain specified financial ratios and restricts the ability of certain of our subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make capital expenditures above specified levels, engage in certain business combinations, or undertake various other corporate activities. Therefore, as a practical matter, these covenants restrict our ability to engage in or benefit from such activities. Further, VeriFone, Inc. must limit its leverage ratio and maintain its interest coverage ratio at or above specified thresholds. In addition, we have, in order to secure our repayment obligations under the Credit Agreement, pledged a substantial amount of our assets and properties. This pledge may reduce our operating flexibility because it restricts our ability to dispose of these secured assets or engage in other transactions that may be beneficial to us.

If we are unable to comply with the covenants in the Credit Agreement, we will be in default, which could result in the acceleration of our outstanding indebtedness. If acceleration occurs, we may not be able to repay our debt and we may not be able to borrow sufficient additional funds to refinance our debt. In addition, under the terms of the Credit Agreement, increases in our leverage ratio could result in increased interest rates and, therefore, higher debt service costs. If we were to default in performance under the Credit Agreement, we may pursue an amendment or waiver from our lenders, but there can be no assurance that the lenders would grant such an amendment or waiver and, in light of current credit market conditions, any such amendment or waiver requested is likely to be on terms, including additional fees, as well as increased interest rates and other more stringent terms and conditions that would be materially disadvantageous to us.

See Note 11, Financing, in the Notes to Consolidated Financial Statements to this Annual Report on Form 10-K for additional information regarding the Credit Agreement.

Our indebtedness and debt service obligations under our Credit Agreement are substantial and may adversely affect our cash flow, cash position, and stock price. Our outstanding indebtedness and debt service obligations are substantial. As of October 31, 2017, we had total indebtedness outstanding of $826.9 million related to the Credit Agreement, payable in quarterly installments through July 8, 2021. Outstanding amounts may be subject to mandatory prepayment with the proceeds of certain asset sales and debt issuances and, for certain of the loan balances, from a portion of annual excess cash flows (as determined in the Credit Agreement) depending on our total net leverage ratio. See Note 11, Financing, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for a schedule of the principal payments due under our credit facilities.

We intend to fulfill our debt service obligations from existing cash and cash from operations. A substantial portion of our cash balances and cash generated from operations are held by our foreign subsidiaries. If we

42 2017 10-K decide to distribute or use such cash and cash equivalents outside those foreign jurisdictions, including a distribution to the U.S. we may be subject to additional taxes or costs. In the future, if we are unable to generate or raise additional cash sufficient to meet our debt service obligations and need to use more of our existing cash than planned or to liquidate investments in order to fund these obligations, we may have to delay or curtail the development and/or the sales and marketing of new payment systems and reduce the amount of expected cash flow available for other purposes, including capital expenditures, investments, acquisitions and dividends. If we are unable to generate sufficient cash flows or other sources of liquidity to meet our debt service requirements, our lenders may declare a default on the Credit Agreement which could result in the termination of commitments under the Credit Agreement, the declaration that all outstanding loans are immediately due and payable in whole or in part, and the requirement of cash collateral deposits in respect of outstanding letters of credit.

Interest rates applicable to our debt are expected to fluctuate based on economic and market factors that are beyond our control. In particular, all of the outstanding debt under the Credit Agreement has a floating interest rate. Although we have entered into a swap arrangement that converts the floating interest rate to a fixed interest rate for a substantial portion of the principal amount under the Credit Agreement through June 2019, any significant increase in market interest rates, and in particular the short-term LIBOR rates, could result in a significant increase in interest expense on the portion of our debt not covered by such swap arrangement and during periods after the expiration of such swap arrangement, which could negatively impact our net income and cash flows.

Our indebtedness could have significant additional negative consequences, including, without limitation: • increasing our vulnerability to general adverse economic conditions; • limiting our ability to obtain additional financing on acceptable terms; and • placing us at a possible competitive disadvantage to less-leveraged competitors and competitors that have better access to capital resources.

The conditions of the U.S. and international capital markets may have an adverse effect on other financial transactions. Deterioration in the U.S. and international capital markets has in the past had an adverse effect on certain of our financial transactions. If financial institutions that have extended credit commitments to us, including under the Credit Agreement, or have entered into hedge, insurance or similar transactions with us, are adversely affected by the conditions of the U.S. and international capital markets, they may become unable to fund borrowings under their credit commitments to us or otherwise fulfill their obligations under the relevant transactions, which could have a material and adverse impact on our financial condition and our ability to borrow additional funds, if needed, for working capital, capital expenditures, acquisitions, and other corporate purposes.

Some provisions of our certificate of incorporation and bylaws may delay or prevent transactions that many stockholders may favor. Some provisions of our certificate of incorporation and bylaws may have the effect of delaying, discouraging or preventing a merger or acquisition that our stockholders may consider favorable, including transactions in which stockholders might receive a premium for their shares. These provisions include: • authorization of the issuance of “blank check” preferred stock without the need for action by stockholders; • the amendment of our organizational documents only by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote at an election of directors; • provision that any vacancy on the board of directors, however occurring, including a vacancy resulting from an enlargement of the board, may only be filled by vote of the directors then in office; • inability of stockholders to call special meetings of stockholders; and • advance notice requirements for board nominations and proposing matters to be acted on by stockholders at annual stockholder meetings.

2017 10-K 43 Our share price has been highly volatile and we expect that the price of our stock may continue to fluctuate substantially. Our stock price has fluctuated substantially since our initial public offering in 2005, for example, due to the announcement of our restatement of certain financial statements in December 2007, during the turmoil in the worldwide financial markets in 2008 and 2009, and more recently following the reporting of certain of our results in 2013 and 2016. In addition to fluctuations related to company-specific factors, broad market and industry factors may adversely affect the market price of our stock, regardless of our actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things: • actual or anticipated variations in quarterly operating results; • changes in our financial guidance or financial estimates by any securities analysts who might cover our stock, or our failure to meet our financial guidance or the estimates made by securities analysts; • uncertainty about current global or regional economic conditions; • changes in the market valuations of other companies operating in our industry or in the technology sector; • the rate at which we return capital to our shareholders; • announcements by us or our competitors related to acquisitions, strategic partnerships, or divestitures; • business disruptions, costs and future events related to shareholder activism; • additions or departures of key personnel; • sales or purchases of our stock, including sales or purchases of our stock by our directors and officers or by significant stockholders; and • repurchases of our stock by us pursuant to our share repurchase program.

ITEM 1B. UNRESOLVED STAFF COMMENTS None.

ITEM 2. PROPERTIES Our headquarters are located in San Jose, California. We have material warehouse and distribution facilities located in the U.S., Brazil, France, Sweden, and Australia.

In the U.S., we maintain material sales and administrative offices and research facilities in Clearwater, Florida; Rocklin, California; Alpharetta, Georgia; and Long Island City, New York. Outside the U.S., we maintain material sales and administrative offices and research facilities in India, France, Germany, the United Kingdom, Israel, Canada, Brazil, China, Taiwan, New Zealand, Philippines, Poland, Denmark, Sweden, Finland, Singapore, and Norway. In addition to these material locations, we also have smaller offices globally.

We own the office buildings at two of our locations, while the rest of our locations are leased. We are using substantially all of our currently available productive space to develop, store, market, sell, and distribute our products and services. We believe our facilities, which are used by both of our operating segments, are in good operating condition, suitable for their respective uses, and adequate for our current needs. The following table summarizes the approximate square footage of our leased space around the world.

Approximate Location Square Footage North America ...... 587,049 Latin America ...... 128,440 EMEA ...... 598,128 Asia-Pacific ...... 293,786 Total ...... 1,607,403

44 2017 10-K ITEM 3. LEGAL PROCEEDINGS Information with respect to legal proceedings may be found in Note 13, Commitments and Contingencies, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K, which section is incorporated herein by reference.

ITEM 4. MINE SAFETY DISCLOSURES Not applicable.

2017 10-K 45 PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has been quoted on the New York Stock Exchange (NYSE) under the symbol PAY since April 29, 2005. Prior to that time, there was no public market for our stock.

The following table sets forth for the indicated periods, the high and low sale prices of our common stock.

Fiscal Year 2017 Quarter Ended Fiscal Year 2016 Quarter Ended Oct 31, Jul 31, Apr 30, Jan 31, Oct 31, Jul 31, Apr 30, Jan 31, 2017 2017 2017 2017 2016 2016 2016 2016 High ...... $21.48 $20.22 $20.98 $19.09 $20.10 $28.38 $29.60 $31.11 Low...... $17.60 $16.92 $17.23 $15.10 $15.04 $17.06 $20.65 $22.32

The closing sale price of our common stock on the NYSE was $17.34 and $19.08 on November 30, 2017 and October 31, 2017, respectively. As of November 30, 2017, there were 71 stockholders of record. Because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these holders of record.

Dividend Policy We have not declared or paid cash dividends on our capital stock since our common stock has been listed on the NYSE. We do not expect to pay any cash dividends for the foreseeable future. We currently intend to retain any future earnings to finance our operations, growth and stock repurchases, and to repay our debt. Any future determination to pay cash dividends will be at the discretion of our Board of Directors, and will be dependent on earnings, financial condition, operating results, capital requirements, any contractual restrictions, and other factors that our Board of Directors deems relevant. In addition, our amended and restated credit agreement contains limitations on the ability of our principal operating subsidiary, VeriFone, Inc., to declare and pay cash dividends. Because we conduct our business through our subsidiaries, as a practical matter these restrictions similarly limit our ability to pay dividends on our common stock.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers In September 2015, the Company’s Board of Directors authorized a program to repurchase up to $200.0 million of the Company’s common stock, with no expiration from the date of authorization. In December 2017, the Company’s Board of Directors expanded the program to include an additional $100.0 million of the Company’s common stock, with no expiration from the date of authorization, for a total of up to $300.0 million. We have repurchased a total of $150.0 million shares of our common stock under this program. Shares may be repurchased from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise. Certain of our share repurchases have been and may from time to time be effected through Exchange Act Rule 10b5-1 repurchase plans. Under the Company’s stock repurchase program, shares repurchased are recorded as an adjustment of par value and Accumulated Deficit. The timing and actual amount of the share repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities, including mergers and acquisitions, market conditions and other factors. We are not obligated to repurchase any specific number of shares under the program and the repurchase program may be modified, suspended, or discontinued at any time. For further information, see Note 5, Stock Repurchase Program, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

No shares were repurchased in the fourth quarter of fiscal year 2017.

Securities Authorized for Issuance Under Equity Compensation Plans Information with respect to Securities Authorized for Issuance Under Equity Compensation may be found in Item 12, Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters, of this Annual Report on Form 10-K, which section is incorporated herein by reference.

46 2017 10-K Performance Graph The following graph and table compares the performance of an investment in our common stock over the period of November 1, 2012 through October 31, 2017, beginning with an investment at the closing market price on October 31, 2012, and thereafter, based on the closing price of our common stock on the market, with the S&P Mid Cap 400 Index. The graph and table assume $100 was invested on the start date at the price indicated, and that dividends, if any, were reinvested on the date of payment without payment of any commissions. The performance shown in the graph and table represents past performance, and should not be considered an indication of future performance.

250

200

150

PAY S&P 400 100

50

0

10/31/12 10/31/13 10/31/14 10/31/15 10/31/16 10/31/17

October 31, October 31, October 31, October 31, October 31, October 31, 2012 2013 2014 2015 2016 2017 VeriFone Systems, Inc...... 100.00 76.45 125.71 101.69 52.23 64.37 S&P Mid Cap 400 Index ...... 100.00 131.49 144.70 147.36 153.96 187.17

The information provided above under the heading “Performance Graph” shall not be considered “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

2017 10-K 47 ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with our Consolidated Financial Statements and the accompanying notes appearing in Item 8, Financial Statements and Supplementary Data, and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included elsewhere in this Annual Report on Form 10-K. The selected data in this section is not intended to replace our Consolidated Statements of Operations and Consolidated Balance Sheets.

Years Ended October 31, 2017 (1) 2016 (1)(2) 2015 (1)(3) 2014 (1)(4) 2013 (6)(7) (In thousands, except per share data) Consolidated Statements of Operations Data: Net revenues ...... $1,870,976 $1,992,149 $2,000,457 $1,868,874 $1,702,221 Operating income (loss) ...... $ (112,378) $ 32,779 $ 106,991 $ 5,885 $ (66,354) Net income (loss) attributable to VeriFone Systems, Inc. stockholders ...... $ (173,829) $ (9,281) $ 79,097 $ (38,130) $ (296,055) Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Basic ...... $ (1.55) $ (0.08) $ 0.69 $ (0.34) $ (2.73) Diluted ...... $ (1.55) $ (0.08) $ 0.68 $ (0.34) $ (2.73)

As of October 31, 2017 2016 2015 (3) 2014 (5)(6) 2013 (7) (In thousands) Consolidated Balance Sheets Data: Cash and cash equivalents ...... $ 131,029 $ 148,352 $ 208,870 $ 250,187 $ 268,220 Total assets ...... $2,322,170 $2,494,807 $2,473,062 $2,681,514 $2,965,295 Current and long-term debt and capital leases .... $ 830,814 $ 925,913 $ 799,329 $ 868,415 $1,011,756 (1) In fiscal year 2017, 2016, 2015, and 2014 we recorded restructuring and related charges totaling $168.9 million, $46.4 million, $8.8 million and $18.1 million, respectively, as part of cost optimization and corporate transformation initiatives including losses from certain disposals. For further information, see Note 12, Restructuring and related charges, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. (2) In fiscal year 2016 we recorded $12.0 million in Other income (expense), net, for fair value adjustments associated with contingent consideration. For further information, see Note 8, Financial Instruments, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. (3) In fiscal year 2015 we recorded a $16.1 million tax benefit as a result of releasing a portion of our valuation allowance against certain non-U.S. foreign deferred tax assets. For further information, see Note 6, Income Taxes, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. (4) In fiscal year 2014 we released a $19.9 million litigation loss contingency expense, plus estimated potential ongoing royalties and interest, related to a favorable ruling in a patent infringement litigation matter. (5) In fiscal year 2014 we made early payments against, and then amended and restated the 2011 Credit Agreement. As part of the amendment and restatement, amounts borrowed, together with cash on hand, were used to repay the $938.6 million outstanding balance on the credit agreement as well as the costs associated with the amendment and restatement. For further information, see Note 11, Financing, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. (6) In fiscal year 2013 we recorded a $64.4 million litigation loss contingency expense primarily related to a securities class action and in fiscal year 2014 we paid $61.2 million into an escrow account to fund the uninsured portion of the settlement in this matter. (7) In fiscal year 2013 we recorded a $245.0 million valuation allowance against a significant portion of our deferred tax assets.

48 2017 10-K ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section and other parts of this Annual Report on Form 10-K and certain information incorporated by reference herein contain forward-looking statements that involve risks and uncertainties. In some cases, forward- looking statements can be identified by words such as “may,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” the negative of such terms, or comparable terminology. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, and management’s beliefs and assumptions, and do not reflect the potential impact of any mergers, acquisitions, or other business combinations or divestitures that have not been completed. Forward-looking statements are not guarantees of future performance, and our actual results may differ materially from the results expressed or implied in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Item 1A, Risk Factors, and elsewhere in this report, including our disclosures of Critical Accounting Policies and Estimates in Item 7, our disclosures in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, as well as in our Consolidated Financial Statements and accompanying notes included elsewhere in this Form 10-K. We are under no duty to update any of the forward-looking statements after the date of this Annual Report on Form 10-K to conform such statements to actual results or to changes in expectations. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is provided in addition to our Consolidated Financial Statements and accompanying notes to assist readers in understanding our results of operations, financial condition and cash flows. This section is organized as follows:

Overview: A discussion of our business, significant matters, and financial results highlights for the periods presented.

Results of Operations: • Consolidated Results of Operations: An analysis and discussion of our financial results comparing our consolidated results of operations for the fiscal year ended October 31, 2017 to the fiscal year ended October 31, 2016, and the fiscal year ended October 31, 2016 to the fiscal year ended October 31, 2015. • Segment Results of Operations: An analysis and discussion of our financial results comparing the results of operations for each of our two reportable segments, Verifone Systems and Verifone Services, for the fiscal year ended October 31, 2017 to the fiscal year ended October 31, 2016, and the fiscal year ended October 31, 2016 to the fiscal year ended October 31, 2015.

Financial Outlook: A discussion of our expectations regarding certain trends that may affect our financial condition and results of operations.

Liquidity and Capital Resources: An analysis of changes in our balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity.

Contractual Obligations and Off-Balance Sheet Arrangements: Disclosures related to our contractual obligations, contingent liabilities, commitments and off-balance sheet arrangements, as of October 31, 2017.

Critical Accounting Policies and Estimates: A discussion of the accounting policies and estimates that we believe are most important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts, as well as recent accounting pronouncements that have had or are expected to have a material impact on our results of operations.

Overview Our Business We are a global leader in payments and commerce solutions. We provide expertise and solutions that add value at the retail point of sale and enable innovative forms of commerce. For over 35 years, we have been a

2017 10-K 49 leader in designing, manufacturing, marketing and supplying a broad range of innovative payment solutions, including customer payments acceptance, connectivity between merchants and financial institutions, as well as security and comprehensive payment and commerce services. We focus on delivering solutions that include innovative point of sale payment capabilities, value-added services that increase merchant revenues and enhance the consumer experience, and solutions that enrich and improve the interaction between merchants and consumers and help merchants run their businesses more efficiently. Key industries in which we operate include financial services, retail, petroleum, restaurant, hospitality, transportation and healthcare.

The markets in which we operate are highly competitive. We compete based on various factors, including product functions and features, pricing, product quality and reliability, design innovation, interoperability with third- party systems and brand reputation. We also compete based on product availability and certifications, as well as service offerings and support. We continue to experience competition from traditional point of sale terminal providers as well as suppliers of electronic cash registers (ECRs) that provide built-in electronic payment capabilities and producers of software that facilitates electronic payments over the Internet, and we also see new companies entering our markets, including entrants offering various forms of mobile device based payment options. In certain geographic markets, such as Brazil, we see customers requiring a choice of lower cost offerings. This trend has increased competition and pricing pressures in those geographies.

We have two operating segments: Verifone Systems and Verifone Services. Verifone Systems delivers point of sale electronic payment devices that run our unique operating systems, security and encryption software, and certified payment software for both payments and commerce. Verifone Services delivers device related services and maintenance, payment transaction routing and reporting, and commerce based services. Our reportable segments are the same as our operating segments.

Systems Sales of our point of sale electronic payment devices and systems comprise approximately 58.0%, 62.1% and 65.5% of our net revenues in the fiscal years ended October 31, 2017, 2016 and 2015, respectively. Our point of sale electronic payment devices run our unique operating systems, security and encryption software, and certified payment software. Our systems solutions are designed to suit our clients’ needs in a variety of environments, including traditional multilane and countertop implementations, self-service or unattended environments, in-vehicle and portable deployments, mobile point-of-sale solutions, as well as fully integrated point of sale solutions. Our solutions can securely process a wide range of payment types including signature and PIN-based debit cards, credit cards, NFC/contactless/radio frequency identification cards, or RFID cards, smart cards, pre-paid gift and other stored-value cards, electronic bill payment, signature capture and electronic benefits transfer, or EBT. Our unique architecture enables multiple value-added applications, including third-party applications, such as gift card and loyalty card programs, healthcare insurance eligibility and time and attendance tracking, and allows these applications to reside on the same system without requiring recertification upon the addition of new applications. During the past year we introduced Verifone Engage, the next generation of our best-selling suite of devices, which is a family of interactive, commerce-enabled payment devices that we believe offer an innovative connected payments experience. We also launched Verifone Carbon, an integrated dual- screen connected point of sale solution that enables merchants to run register and business applications from a tablet screen while enabling consumers to pay and interact with a consumer-facing screen. Combining our Verifone Engage and Carbon payment solutions with our mobile family of devices, we are able to deliver rich media and complex commerce enablement services on our payment terminals to our merchant clients, as well as mobile solutions and products geared for price sensitive emerging markets.

Services Services are an important part of our business and revenues, accounting for approximately 42.0%, 37.9% and 34.5% of our net revenues in the fiscal years ended October 31, 2017, 2016 and 2015, respectively. We offer a wide portfolio of services, ranging from traditional device related support services, transaction payment services and commerce enablement offerings that are designed to facilitate commerce and payment opportunities for merchants, to cloud-based services. Our services offerings include transaction services, managed services and terminal management solutions, security solutions, cloud services, and other value-added services at the point of sale. We also offer a host of support services, including software development, installation and deployment, warranty, post-sale support, repairs, and training.

50 2017 10-K Timing of Revenue The timing of our customer orders may cause our revenue to vary from period to period. Specifically, revenues recognized in our fiscal quarters can vary significantly when larger customers or our distributors delay orders due to regulatory and industry standards compliance, budget considerations, product feature availability, dual vendor sourcing requirements, technology refresh cycles, economic conditions or other concerns that impact their business or purchasing decisions. For example, the timing of customer orders is often impacted by the timing of technology refreshes or the timing of completed product certifications by a particular customer or in a particular market. Customer purchases have also been impacted by regulatory factors such as new or pending banking regulations and government initiatives to drive cashless transactions.

In addition, revenues can be back-end weighted when we receive sales orders and deliver a higher proportion of our systems toward the end of our fiscal quarters. This variability and back-end weighting of orders may adversely affect our results of operations in a number of ways and could negatively impact revenues and profits. First, the product mix of orders may not align with manufacturing forecasts, which could result in a shortage of the components needed for production. Second, existing manufacturing capacity may not be sufficient to deliver the desired volume of orders in a concentrated time when they are received. Third, back-end weighted demand could negatively impact gross margins through higher labor, delivery and other manufacturing and distribution costs. If, on the other hand, we were to seek to manage the fulfillment of back-end weighted orders through holding increased inventory levels, we would risk higher inventory obsolescence charges if our sales fall short of our expectations.

Because our revenue recognition depends on, among other things, the timing of product shipments, decisions we make about product shipments, particularly toward the end of a fiscal quarter, may impact our reported revenues. The timing of product shipments may depend on a number of factors, including costs of air shipments if required, the delivery date requested by customers and our operating capacity to fill orders and ship products, as well as our own long and short-term business planning and supply chain management. These factors may affect timing of shipments and consequently revenues recognized for a particular period.

Significant Matters Business Divestitures As part of our strategic review of under-performing businesses, our management has completed several recent divestitures.

China Business During June 2017, we completed the divestiture of a controlling interest in Verifone Systems (China), Inc., the entity which operated our China business. In connection with this divestiture, we retained a 30% preferred equity interest in the form of non-voting equity that has a liquidation preference of $29.0 million and is non-convertible for an initial two year period. We recorded a $24.4 million loss in connection with the sale of this business. Revenues from this business totaled $11.2 million, $16.4 million, and $40.1 million for the fiscal years ended October 31, 2017, 2016, and 2015 respectively. Historical operating losses from this business totaled $7.2 million, $15.3 million, and $7.0 million for the fiscal years ended October 31, 2017, 2016, and 2015 respectively.

Petroleum Media Business During April 2017, we exited our petroleum media business by terminating certain customer agreements and contributing certain assets to a newly formed business, Gas Media, in exchange for a 50% ownership interest in that business. We recorded a net $67.6 million charge in connection with the divestiture and planned contract terminations.

Taxi Solutions Business During March 2017, we committed to a plan to sell our former Taxi Solutions reporting unit, which was sold on December 11, 2017. During the second quarter of fiscal year 2017 we recorded a $17.4 million goodwill impairment, considering potential sales transactions and the then fair value of the reporting unit and we classified

2017 10-K 51 the net assets and liabilities of this business, including Accounts receivable, Prepaid expenses and other current assets, Fixed Assets, Goodwill, Purchased intangible assets, net and Accruals and other current liabilities, as held for sale. Additionally, during fiscal year 2017, based upon continued negotiations of potential sales transactions, management updated the fair value of the assets held for sale, resulting in charges totaling $50.2 million. Revenues from this business totaled $106.5 million, $123.3 million, and $119.9 million for the fiscal years ended October 31, 2017, 2016, and 2015 respectively. Operating losses from this business totaled $4.5 million and $0.9 million for the fiscal years ended October 31, 2017, and 2015 respectively, and operating income of $4.4 million for the fiscal year ended October 31, 2016.

Restructuring Plans Additionally, as part of cost optimization and corporate transformation initiatives, our management has approved, committed to and initiated various restructuring plans to reduce headcount, exit under-performing businesses, and consolidate facilities and data centers over the past two years. During June 2017, our management committed to a new plan under which we have spent $11.8 million primarily related to headcount reductions. This plan is expected to be substantially complete by the end of fiscal year 2018. During June 2016, our management committed to a restructuring plan that is substantially complete and under which we have incurred charges totaling $20.7 million.

Financial Results Highlights Overall • Services net revenues for the fiscal year ended October 31, 2017 increased by $18.8 million or 2.4% compared to the prior year, and grew to 42% of total net revenues from 38% of total net revenues, year over year, reflecting our progress executing our strategy to transform Verifone from primarily a terminal sales company to a platform services company. • Total research and development, sales and marketing, and general and administrative expenses for the fiscal year ended October 31, 2017 decreased by $33.9 million to $595.2 million from $629.1 million in the prior year, reflecting our focus on restructuring and efficiency initiatives including divesting non-strategic and capital intensive businesses, operating system consolidations and streamlining back office operations. • Net cash provided by operating activities for the fiscal year ended October 31, 2017 was $166.0 million reflecting our continued emphasis on working capital management.

52 2017 10-K Results of Operations Consolidated Results of Operations

Years Ended October 31, % of Net % of Net % of Net 2017 revenues (1) 2016 revenues (1) 2015 revenues (1) (in thousands, except percentages) Net revenues: Systems ...... $1,085,478 58.0% $1,236,361 62.1% $1,309,628 65.5% Services ...... 785,498 42.0% 755,788 37.9% 690,829 34.5% Total net revenues ...... 1,870,976 100.0% 1,992,149 100.0% 2,000,457 100.0% Gross margin: Systems ...... 396,923 36.6% 492,050 39.8% 535,812 40.9% Services ...... 316,089 40.2% 302,261 40.0% 290,171 42.0% Total gross margin ...... 713,012 38.1% 794,311 39.9% 825,983 41.3% Operating expenses: Research and development .... 211,615 11.3% 207,503 10.4% 198,135 9.9% Sales and marketing ...... 193,982 10.4% 217,039 10.9% 224,745 11.2% General and administrative .... 189,635 10.1% 204,552 10.3% 203,978 10.2% Restructuring and related charges ...... 143,152 7.7% 41,254 2.1% 8,429 0.4% Litigation settlement and loss contingency expense ...... — — % 650 — % 1,213 0.1% Amortization of purchased intangible assets ...... 69,622 3.7% 90,534 4.5% 82,492 4.1% Goodwill impairment ...... 17,384 0.9% — — % — — % Total operating expenses ...... 825,390 44.0% 761,532 38.2% 718,992 35.9% Operating income (loss) ...... (112,378) (6.0)% 32,779 1.6% 106,991 5.3% Interest expense, net ...... (33,197) (1.8)% (34,564) (1.7)% (31,455) (1.6)% Other income (expense), net . . . 2,756 0.1% 3,612 0.2% (2,588) (0.1)% Income (loss) before income taxes ...... (142,819) (7.6)% 1,827 0.1% 72,948 3.6% Income tax provision (benefit) . . 32,500 1.7% 11,527 0.6% (7,409) (0.4)% Consolidated net income (loss) . . . $ (175,319) (9.4)% $ (9,700) (0.5)% $ 80,357 4.0%

(1) Systems and Services gross margin as a percentage of net revenues is computed as a percentage of the corresponding Systems and Services net revenues.

Fiscal Year 2017 compared to Fiscal Year 2016 Net revenues for the fiscal year ended October 31, 2017 were $1.87 billion, compared to $1.99 billion for the fiscal year ended October 31, 2016, down $121.1 million or 6.1%. Net revenues decreased primarily due to decreased demand for EMV enabled devices in North America, as well as the timing of certain large customer purchases. See further discussion of revenues by segment and geography below.

2017 10-K 53 Net Revenues by Geography

Years Ended October 31, % of Net % of Net 2017 revenues 2016 revenues (in thousands, except percentages) Net Revenues North America ...... $ 630,201 33.7% $ 803,616 40.3% Latin America ...... 271,029 14.5% 247,949 12.4% EMEA ...... 735,360 39.3% 738,261 37.1% Asia-Pacific ...... 234,386 12.5% 202,323 10.2% Total ...... $1,870,976 100.0% $1,992,149 100.0%

• North America net revenues decreased $173.4 million, due primarily to reduced demand for our EMV capable terminals by customers that had upgraded to products that support EMV requirements in the prior fiscal year. • Latin America net revenues increased $23.1 million, due primarily to changes in timing of purchase decisions by large customers, which were influenced by factors such as macroeconomic conditions and compliance with various government e-payment initiatives. • EMEA net revenues decreased $2.9 million, as a result of changes in timing of purchase decisions, which were influenced by factors such as macroeconomic conditions, government fiscalization programs and timing of customer technology refreshes. Partially offsetting these factors, EMEA net revenues increased $9.9 million due to our acquisition of InterCard, which closed in December 2015. • Asia-Pacific net revenues increased $32.1 million, due primarily to increases in point-of-sale device sales in India as a result of government demonetization initiatives.

Gross margin for the fiscal year ended October 31, 2017 was $713.0 million or 38.1% of net revenues, compared to $794.3 million, or 39.9% of net revenues, for the fiscal year ended October 31, 2016, down $81.3 million or 1.8 percentage points. Gross margin in dollars decreased primarily due to the decrease in net revenues, a $10.6 million charge related to the divestiture of our petroleum media business and an $11.1 million charge related to our China business divestiture. Gross margin as a percentage of net revenues decreased due primarily to changes in geographic and product mix, such as decreases in net revenues from North America, which generally have higher gross margins compared to other geographies, as well as the charges associated with our petroleum media and China business divestitures.

Research and development for the fiscal year ended October 31, 2017 was $211.6 million, compared to $207.5 million for the fiscal year ended October 31, 2016, up $4.1 million or 2.0%, due primarily to write downs of capitalized software development and acquired intangible assets totaling $16.1 million. The remaining research and development expenses decreased $12.1 million year over year primarily as a result of higher costs in the prior year associated with additional personnel and outside resources that were hired to develop and bring next generation products and solutions, such as our recently launched Verifone Engage and Carbon payment solutions to market.

Sales and marketing for the fiscal year ended October 31, 2017 was $194.0 million, compared to $217.0 million for the fiscal year ended October 31, 2016, down $23.0 million or 10.6%, due primarily to reduced variable costs associated with lower revenues and decreased spend associated with cost savings initiatives.

General and administrative for the fiscal year ended October 31, 2017 was $189.6 million, compared to $204.6 million for the fiscal year ended October 31, 2016, down $15.0 million or 7.3%, due primarily to decreased spend as a result of cost savings initiatives.

Restructuring and related charges for the fiscal year ended October 31, 2017 was $143.2 million, compared to $41.3 million for the fiscal year ended October 31, 2016, up $101.9 million, primarily as a result of our business divestitures. The $143.2 million charge in the fiscal year ended October 31, 2017 is comprised primarily of a $102.0 million fair value write-down associated with assets held for sale, a $28.1 million charge related to contract cancellation obligations and a $12.3 million employee and facility related restructuring charge. The $41.3 million charge in the fiscal year ended October 31, 2016 is comprised of a $22.0 million fair value write-

54 2017 10-K down associated with assets held for sale, a $13.0 million employee and facility related restructuring charge, and a $6.3 million charge related to a contract cancellation.

Amortization of purchased intangible assets for the fiscal year ended October 31, 2017 was $69.6 million compared to $90.5 million for the fiscal year ended October 31, 2016, down $20.9 million or 23.1%, primarily because a portion of our purchased intangible assets were fully amortized in the prior fiscal year, partially offset by an increase in amortization for purchased intangible assets associated with acquired businesses.

Goodwill impairment for the fiscal year ended October 31, 2017 was $17.4 million related to our former Taxi Solutions reporting unit based on a quantitative assessment and potential sales transactions.

Income tax provision (benefit) for the fiscal year ended October 31, 2017 was a $32.5 million provision, compared to a $11.5 million provision for the fiscal year ended October 31, 2016, up $21.0 million. The income tax provision for the fiscal year ended October 31, 2017 was primarily related to foreign taxes and an increase to reserves for unrecognized tax benefits. The income tax provision for the fiscal year ended October 31, 2016 was primarily related to an increase in foreign taxes, partially offset by tax benefits related to release of reserves for unrecognized tax benefits in jurisdictions where statutes of limitations expired and audits were settled.

Fiscal Year 2016 compared to Fiscal Year 2015 Net revenues for the fiscal year ended October 31, 2016 were $1.99 billion, compared to $2.00 billion for the fiscal year ended October 31, 2015, down $8.4 million or 0.4%, net of a $77.8 million negative foreign currency impact. Systems net revenues decreased $73.3 million primarily as a result of decreased demand that was substantially offset by a $64.9 million increase in Services net revenues, which is primarily from acquired businesses. The foreign currency impact was due primarily to a decrease in the values of the Brazilian real, the Argentine peso, the South African rand, and the British Pound. (See further discussion of revenues by segment and geography below.)

Net Revenues by Geography

Years Ended October 31, % of Net % of Net 2016 revenues 2015 revenues (in thousands, except percentages) Net Revenues North America ...... $ 803,616 40.3% $ 791,655 39.6% Latin America ...... 247,949 12.4% 275,706 13.8% EMEA ...... 738,261 37.1% 696,346 34.8% Asia-Pacific ...... 202,323 10.2% 236,750 11.8% Total ...... $1,992,149 100.0% $2,000,457 100.0%

• North America net revenues increased $12.0 million, due primarily to a $121.9 million increase as a result of increased demand for our EMV capable devices by petroleum customers and a $35.9 million increase in Services net revenues due primarily to growth in payment-related services as a result of our continued efforts to grow our recurring services offerings. The increases were substantially offset by a $146.7 million decrease due primarily to reduced demand for our EMV capable devices by Tier 1 retailers that had upgraded to products that support EMV requirements in the prior fiscal year. • Latin America net revenues decreased $27.8 million, due primarily to a $34.8 million negative impact as a result of unfavorable foreign currency fluctuations, partially offset by an increase in net revenues due to growth in our Services offerings. • EMEA net revenues increased $41.9 million, due primarily to $45.5 million in net revenues from InterCard in Germany, which was acquired in December 2015. Net revenues in the rest of EMEA increased due primarily to timing of purchase decisions by our large customers, but those increases were offset by a $31.8 million negative impact due to unfavorable foreign currency fluctuations. • Asia-Pacific net revenues decreased $34.4 million, due to a $23.7 million decrease in China where we have not yet released a lower cost suite of products to meet customer preferences in that market, and an

2017 10-K 55 $18.1 million decrease in Australia due to reduced demand from some of our large banking customers who upgraded the terminal base at their merchant customers in the prior fiscal year. These decreases were partially offset by an increase in demand from some of our large customers in the rest of Asia- Pacific. The decrease in net revenues also reflects a $10.2 million negative impact due to the unfavorable foreign currency fluctuations.

Gross margin for the fiscal year ended October 31, 2016 was $794.3 million or 39.9% of total net revenues, compared to $826.0 million, or 41.3% of total net revenues, for the fiscal year ended October 31, 2015, down $31.7 million or 1.4 percentage points. Gross margin in dollars decreased due primarily to the decrease in net revenues. Gross margin as a percentage of net revenues decreased due primarily to changes in geographic and product and services mix. For example, in North America net revenues have shifted from higher margin large customers who completed substantial EMV roll outs in the prior year to more purchases in the current year by our distributors and petroleum customers purchasing products with lower margin. In addition, we experienced competitive pricing pressures in Latin America that have resulted in lower margins year over year.

Research and development for the fiscal year ended October 31, 2016 was $207.5 million compared to $198.1 million for the fiscal year ended October 31, 2015, up $9.4 million or 4.7%, due primarily to an increase in personnel related and outside contractor expenses associated with our fiscal year 2016 acquisitions and our ongoing investment in additional resources to develop and bring next generation products and solutions to market.

Sales and marketing for the fiscal year ended October 31, 2016 was $217.0 million, compared to $224.7 million for the fiscal year ended October 31, 2015, down $7.7 million or 3.4%, due primarily to reduced variable costs associated with lower revenues and decreased spend associated with cost savings initiatives, partially offset by additional costs related to acquired businesses.

General and administrative for the fiscal year ended October 31, 2016 was $204.6 million, compared to $204.0 million for the fiscal year ended October 31, 2015, up $0.6 million or 0.3%, due primarily to costs related to acquired businesses. The increase was substantially offset by decreased spend as a result of cost savings initiatives and reduced variable compensation.

Restructuring and related charges for the fiscal year ended October 31, 2016 was $41.3 million, compared to $8.4 million for the fiscal year ended October 31, 2015, up $32.9 million, due primarily to a $22.0 million write- down to reflect assets held for sale at fair value and a $6.3 million charge to operating expenses for costs to terminate a contract related to a service we no longer offer.

Amortization of purchased intangible assets for the fiscal year ended October 31, 2016 was $90.5 million compared to $82.5 million for the fiscal year ended October 31, 2015, up $8.0 million or 9.7%, due primarily to an increase in purchased intangible assets associated with recently acquired businesses.

Interest expense, net for the fiscal year ended October 31, 2016 was $34.6 million compared to $31.5 million for the fiscal year ended October 31, 2015, up $3.1 million or 9.8%, due primarily to higher loan balances related to new borrowings for acquisitions.

Income tax provision (benefit) for the fiscal year ended October 31, 2016 was $11.5 million provision, compared to $7.4 million benefit for the fiscal year ended October 31, 2015, an $18.9 million change. The income tax provision for the fiscal year ended October 31, 2016 was primarily related to an increase in foreign taxes, partially offset by tax benefits related to release of reserves for unrecognized tax benefits in jurisdictions where statutes of limitations expired and audits were settled. The income tax benefit for the fiscal year ended October 31, 2015 was due primarily to a change in our valuation allowance assessment against certain non-U.S. deferred tax assets offset by foreign taxes.

Segment Results of Operations Net revenues and operating income of each segment reflect net revenues and expenses that are directly attributable to that segment. Net revenues and expenses not allocated to segment net revenues and segment operating income include amortization of purchased intangible assets, amortization of step-down in deferred services net revenues and associated costs of net revenues at acquisition, restructuring and related charges, goodwill impairment, stock-based compensation, as well as general and administrative and corporate research and development expense.

56 2017 10-K Verifone Systems Net Revenues and Operating Income Our Verifone Systems business delivers point of sale electronic payment devices that run our unique operating systems, security and encryption software, and certified payment software globally, for both payments and commerce.

Fiscal Year 2017 compared to Fiscal Year 2016

Years Ended October 31, % of Net % of Net 2017 revenues 2016 revenues (in thousands, except percentages) Net revenues ...... $1,085,478 57.9% $1,236,361 61.6% Operating income ...... $ 176,722 16.3% $ 252,326 20.4%

Net revenues for the fiscal year ended October 31, 2017 were $1.09 billion, compared to $1.24 billion for the fiscal year ended October 31, 2016, down $150.9 million or 12.2%. Net revenues from our EMV capable devices decreased by $163.0 million due primarily to reduced demand by customers that had upgraded to products that support EMV requirements in the prior year and EMV liability deadline extensions for the petroleum market. Net revenues from the sale of unattended, portable and mobile devices increased by $28.0 million due primarily to increased demand in India related to the government demonetization initiatives, which was partially offset by decreased demand in Europe related to the timing of customer tenders.

Operating income for the fiscal year ended October 31, 2017 was $176.7 million or 16.3% of net revenues, compared to $252.3 million or 20.4% of net revenues for the fiscal year end October 31, 2016, down $75.6 million or 4.2 percentage points. Operating income in dollars decreased due primarily to reduced net revenues and higher costs associated with the recent launch of our new Verifone Engage and Carbon payment solutions. Operating income as a percentage of net revenues decreased due primarily to changes in geographic and product mix, such as the shift away from North America, which generally has higher margins compared to other geographies.

Fiscal Year 2016 compared to Fiscal Year 2015

Years Ended October 31, % of Net % of Net 2016 revenues 2015 revenues (in thousands, except percentages) Net revenues ...... $1,236,361 61.6% $1,309,628 65.5% Operating income ...... $ 252,326 20.4% $ 294,857 22.5%

Net revenues for the fiscal year ended October 31, 2016 were $1.236 billion, compared to $1.310 billion for the fiscal year ended October 31, 2015, down $73.3 million or 5.6%, net of a $46.8 million negative impact due to unfavorable foreign currency fluctuations. Net revenues from the sale of countertop and pinpad devices decreased $42.8 million, due primarily to reduced customer demand in Asia-Pacific, as well as decreases in customer demand due to economic weakness and competitive pricing pressures in Latin America. Net revenues from the sale of multilane products decreased $111.6 million due primarily to reduced demand for our EMV capable devices by certain Tier 1 retailers that had upgraded to products that support EMV requirements in the prior year. Net revenues from the sale of petroleum products increased $108.9 million due primarily to increasing adoption of EMV capable devices. Net revenues from the sale of portable and mobile devices decreased $25.0 million due primarily to decrease in demand by large customers as they rolled out new terminals with EMV capabilities in fiscal year 2015 that did not recur.

Operating income for the fiscal year ended October 31, 2016 was $252.3 million or 20.4% of net revenues, compared to $294.9 million or 22.5% of net revenues for the fiscal year ended October 31, 2015, down $42.5 million or 2.1 percentage points. Operating income in dollars decreased due primarily to reduced revenue, partially offset by decreased spend associated with cost savings initiatives.

2017 10-K 57 Verifone Services Net Revenues and Operating Income Verifone Services offers a wide portfolio of services and subscription-based solutions that are designed to be complementary to our Systems. These services range from traditional device related support services, transaction payment services, cloud-based payment services, and commerce enablement offerings that are designed to facilitate commerce and payment opportunities for merchants. Our traditional terminal-related support services include professional services related to installation and deployment, helpdesk support, training, equipment repair and maintenance and software post-contract support. Our value-added transaction services include terminal management services and gateway solutions that enable more efficient routing of transactions, multi-channel acceptance and processing, along with end-to-end encryption to reduce the complexity and costs of Payment Card Industry, or PCI, standards compliance. Our commerce enablement solutions leverage our terminals to engage consumers at the point of sale through value-added applications such as loyalty and couponing applications, targeted offers and real-time reward redemptions. Our omni-channel services provide seamless interoperability between online and offline payments.

Fiscal Year 2017 compared to Fiscal Year 2016

Years Ended October 31, % of Net % of Net 2017 revenues 2016 revenues (in thousands, except percentages) Net revenues ...... $788,491 42.1% $769,715 38.4% Operating income ...... $206,840 26.2% $198,426 25.8%

Net revenues for the fiscal year ended October 31, 2017 were $788.5 million compared to $769.7 million for the fiscal year ended October 31, 2016, up $18.8 million or 2.4%, due primarily to increased demand for device- related and payment-related services solutions, particularly in EMEA. These increases were partially offset by a $16.8 million decrease in revenues from our Taxi Solutions business, as well as the impact of exiting our petroleum media business in April 2017, which generated $4.9 million revenues in the fiscal year ended October 31, 2017 compared to $19.2 million revenues in the fiscal year ended October 31, 2016.

Operating income for the fiscal year ended October 31, 2017 was $206.8 million or 26.2% of net revenues, compared to $198.4 million or 25.8% of net revenues for the fiscal year ended October 31, 2016, up $8.4 million or 0.5 percentage points. Operating income in dollars increased due primarily to increases in net revenues and decreases in operating expenses, as well as due to our exit from the petroleum media business in April 2017 that incurred operating losses in the prior year. Operating income as a percentage of net revenues increased due primarily to changes in geographic and product mix, decreases in operating expenses and the absence of the lower petro media product margins.

Fiscal Year 2016 compared to Fiscal Year 2015

Years Ended October 31, % of Net % of Net 2016 revenues 2015 revenues (in thousands, except percentages) Net revenues ...... $769,715 38.4% $691,822 34.6% Operating income ...... $198,426 25.8% $178,754 25.8%

Net revenues for the fiscal year ended October 31, 2016 were $769.7 million compared to $691.8 million for the fiscal year ended October 31, 2015, up $77.9 million or 11.3%, net of a $31.0 million negative impact due to unfavorable foreign currency fluctuations. Net revenues increased $45.5 million from the acquisition of InterCard in December 2015 and $18.6 million from the acquisition of AJB in February 2016. Net revenues increased $11.5 million due primarily to growing demand for payment-related services in North America as a result of our increased focus on expanding our services offerings.

Operating income for the fiscal year ended October 31, 2016 was $198.4 million or 25.8% of net revenues, compared to $178.8 million or 25.8% of net revenues for the fiscal year ended October 31, 2015, up $19.7 million and flat as a percentage of net revenues. Operating income in dollars increased due primarily to increases in net revenues. Operating income as a percentage of net revenues remained flat as higher margins from our recently acquired businesses, InterCard and AJB were fully offset by changes in geographic mix.

58 2017 10-K Financial Outlook Overview We expect the timing and amount of revenue to continue to be impacted by factors such as our recent divestitures, the timing of our customers’ technology refresh cycles, changes in distribution and distributor inventory levels, the timing of new product releases and certifications, macroeconomic conditions, local competitive and pricing dynamics, and uncertain political conditions in certain markets.

Recent and Planned Divestitures As part of our strategic review of under-performing businesses, we have divested several businesses, including our China and Taxi Solutions businesses. Revenue from our China and Taxi Solutions businesses totaled $117.7 million in fiscal year 2017 and $139.7 million in fiscal year 2016. We expect our revenues to decrease in the future as a result of these divestitures, but expect the divestitures to have a positive effect on operating margins.

Technology and Industry Standards We expect the timing of new product releases and industry standards to continue to have a significant impact on our net revenues. Net revenues can vary significantly when larger customers or distributors cancel or delay orders due to changes in regulatory and industry standards, budget considerations, product feature availability, dual vendor sourcing requirements, technology refresh cycles, economic conditions or other concerns that impact their business or purchasing decisions. Also, demand for electronic payment systems may eventually reach a saturation point, at which time customers might slow or end expansion projects. We expect to generate additional net revenues in the U.S. related to the continued adoption of EMV standards in the future, particularly by the petroleum market and small and medium businesses, and increased desire for mobile payment devices, although the timing of any related revenues will depend on the timing of decisions by merchants. We expect that timing of merchant decisions will continue to depend on when EMV certifications are completed as well as payments- industry mandated compliance timelines. We expect growth in emerging markets as economic conditions improve and those markets make efforts to modernize to cashless payment systems.

Global Markets and Competition As a result of our global customer base, we expect that our net revenues will continue to be impacted by macroeconomic conditions such as foreign currency fluctuations, economic sanctions and other trade restrictions, and changing global oil prices, particularly in certain markets such as Argentina, Brazil, Russia, the Middle East and Africa, as well as electronics payment initiatives, such as in Thailand. We expect that prolonged economic weakness in Latin America and uncertain political conditions in certain other markets, such as Turkey, may have a continued negative impact on our ability to do business or operate at a desired level.

We expect that the markets in which we conduct our business will remain highly competitive, characterized by changing technologies, evolving industry standards and government regulations that may favor one product or technology over others, and increased demand for new functionality, premium services, mobility and security. In particular, we expect that there will be continued demand for lower priced products in certain emerging markets, such as Brazil. We expect the ongoing competitive pricing pressures that we have seen in recent periods may continue to adversely impact our net revenues in the future. Market disruptions caused by new technologies, the entry of new competitors, mobile order and pay, the presence of strong local competition, consolidations among our customers and competitors, changes in regulatory requirements, timing of electronic payments initiatives that create demand for our products in emerging markets, new technology entrants, and other factors, can also introduce volatility into our business.

Our Business and Focus We continue to focus on expanding our Services offerings globally. We are investing in select markets in order to expand our payment services into new countries and to improve the functionality of our payment services in existing markets. We also continue to invest in commerce enablement solutions, using our consumer-facing point of sale terminals to offer services complementary to our payment solutions that facilitate commerce between

2017 10-K 59 merchants and consumers. We expect continued growth in Services net revenues as a result of these efforts. As we transition to more service oriented arrangements, we may experience a shift in the timing of Systems net revenues as revenue recognition will depend on when all of our performance obligations are complete.

As part of our transformation initiatives, we continue to focus on research and development activities and expect to continue at current spend levels as we focus on system and service solutions, as well as continue to advance our platform development efforts in order to increase standardization, shorten our product development life-cycle and time to market, and also ensure timely certification of our products in each market.

We also plan to continue efforts to improve our cost structure and streamline all aspects of our business, including a continued strategic review of under-performing products and businesses, as well as evaluating internally developed technology and consolidating and upgrading some of our global suppliers. In connection with our transformation efforts, we have approved restructuring plans under which we have reduced headcount, closed facilities and committed to exit under-performing businesses, such as our petroleum media and Taxi Solutions businesses. We expect to incur additional costs under the previously approved plans and expect to approve additional plans and make strategic changes in the future. Our existing and future restructuring plans may generate ongoing savings, some of which will continue to be reinvested into growth initiatives as part of our transformation program. Overall, spending may increase further depending on the costs of any future restructuring plans, costs associated with new acquisitions or ongoing integration of past acquisitions, costs to exit under-performing businesses, as well as costs related to resolving legal and tax matters.

Liquidity and Capital Resources Our primary liquidity and capital resource needs are to finance working capital, pay for contractual commitments, service our debt and make capital expenditures and investments. As of October 31, 2017, our primary sources of liquidity were $131.0 million of cash and cash equivalents, as well as amounts available to us under the revolving loan that is part of our Credit Agreement.

Cash and cash equivalents as of October 31, 2017 included $129.8 million held by our foreign subsidiaries. If we decide to distribute or use the cash and cash equivalents held by our foreign subsidiaries outside those foreign jurisdictions, including a distribution to the U.S., we may be subject to additional taxes or costs, or face regulatory restrictions on the amount of cash that can be distributed out of some countries.

We also held $12.7 million in restricted cash as of October 31, 2017, which comprised of cash held on behalf of customers as part of our transaction processing services.

As of October 31, 2017, our outstanding borrowings consisted of a $465.0 million term A loan, $193.5 million term B loan, $168.4 million drawn against a revolving loan commitment and $10.7 million under capital leases and other debt. In addition, $331.6 million was available for draw on the revolving loan commitment, subject to covenant requirements. See Note 11, Financing, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K for additional information regarding our borrowings. We were in compliance with all financial covenants under our credit agreement as of October 31, 2017.

As of October 31, 2017, we had outstanding interest rate swap agreements to effectively convert $400.0 million of the term A loan from a floating rate plus applicable margin to a 1.20% fixed rate plus applicable margin.

As part of our cost optimization and corporate transformation initiatives, we have approved restructuring plans and canceled contracts under which we made cash payments totaling $26.9 million during fiscal year 2017. We expect to make additional cash payments totaling approximately $9.5 million under approved restructuring plans in fiscal year 2018 and may approve additional restructuring plans as our transformation initiatives continue. We are also obligated to spend approximately $18.4 million pursuant to canceled customer contracts.

As of October 31, 2017, we are authorized to repurchase shares of our common stock with an aggregate value of up to $50.0 million. The timing and actual amount of the share repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities, including mergers and acquisitions, market conditions and other factors. We are not obligated to repurchase any specific

60 2017 10-K number of shares under the program and the repurchase program may be modified, suspended or discontinued at any time. In December 2017, our Board of Directors authorized us to expand the stock repurchase program to allow the repurchase of additional shares of our common stock with an aggregate value of up to $100.0 million, with no expiration from the date of authorization. As of December 18, 2017, there was $150.0 million remaining available for stock repurchases under this program.

Our future capital requirements may vary significantly from prior periods as well as from those capital requirements we have currently planned. These requirements will depend on a number of factors, including operating factors such as our terms and payment experience with customers, the timing of annual recurring billings in some markets, the resolution of any legal proceedings against us or settlement of litigation in an amount in excess of our insurance coverage, costs related to acquisitions, restructuring expenses, stock repurchases and investments we may make in infrastructure, product or market development, or to expand our revenue generating asset base as well as timing and availability of financing. Based upon our current level of operations, we believe that we have the financial resources to meet our business requirements for the next year, including capital expenditures, working capital requirements, future strategic investments and debt servicing costs, stock repurchases and to maintain compliance with our financial covenants.

Bank Guarantees We have issued bank guarantees with maturities ranging from two months to eight years to certain of our customers and vendors as required in some countries to support certain performance obligations under our service or other agreements with those parties. As of October 31, 2017, the maximum amount that may become payable under these guarantees was $15.9 million, of which $2.1 million was collateralized by restricted cash deposits.

In addition, in connection with our investment in Gas Station TV we have agreed to guarantee, in certain circumstances, up to $12.5 million of debt issued to Gas Media. As of October 31, 2017, we have not made any payments and no amounts are accrued related to this guarantee.

Statement of Cash Flows The net increase (decrease) in cash, cash equivalents and restricted cash are summarized in the following table (in thousands):

Years Ended October 31, 2017 Change 2016 Change 2015 Net cash provided by (used in): Operating activities ...... $165,966 $ (31,470) $ 197,436 $ (50,693) $ 248,129 Investing activities ...... (72,706) 202,483 (275,189) (146,740) (128,449) Financing activities ...... (112,457) (136,816) 24,359 157,917 (133,558) Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash . . . 3,745 7,039 (3,294) 25,920 (29,214) Net increase (decrease) in cash, cash equivalents and restricted cash ...... $ (15,452) $ 41,236 $ (56,688) $ (13,596) $ (43,092)

Fiscal Year 2017 vs. Fiscal Year 2016 Operating Activities Net cash provided by operating activities for the fiscal year ended October 31, 2017 was $166.0 million, down $31.5 million from $197.4 million in cash provided during the fiscal year ended October 31, 2016. Cash provided by operations before changes in operating assets and liabilities decreased by $63.0 million, which is primarily due to our $165.6 million increased operating loss, which included $114.5 million of non-cash restructure charges, compared to $31.2 million in the prior year period. This decrease was substantially offset by a $31.6 million increase in cash provided by changes in operating assets and liabilities, due primarily to our continued focus on better working capital management.

2017 10-K 61 Investing Activities Net cash used in investing activities for the fiscal year ended October 31, 2017 was $72.7 million, compared to $275.2 million for the fiscal year ended October 31, 2016, down $202.5 million, due primarily to $172.2 million in payments for acquired businesses during the fiscal year ended October 31, 2016, compared to $5.0 million during the fiscal year ended October 31, 2017. Additionally, capital expenditures decreased $38.0 million year over year due primarily to cost savings initiatives and the divestiture of our Petro Media business, which was capital intensive.

Financing Activities Net cash used in financing activities for the fiscal year ended October 31, 2017 was $112.5 million compared to $24.4 million in cash provided during the fiscal year ended October 31, 2016, a $136.8 million change, due primarily to a $284.3 million decrease in proceeds from new debt related to fewer business acquisitions in the current year, offset by a $67.4 million decrease in debt repayments and $79.9 million in stock repurchases during the fiscal year ended October 31, 2016 that did not recur. We had no stock repurchases during the fiscal year ended October 31, 2017.

Fiscal Year 2016 vs. Fiscal Year 2015 Operating Activities Net cash provided by operating activities for the fiscal year ended October 31, 2016 was $197.4 million, down $50.7 million from $248.1 million in cash provided during the fiscal year ended October 31, 2015, primarily due to a $90.1 million decrease in consolidated net income partially offset by a $34.6 million improvement as a result of better working capital management.

Investing Activities Net cash used in investing activities for the fiscal year ended October 31, 2016 was $275.2 million, compared to $128.4 million for the fiscal year ended October 31, 2015, up $146.7 million, due primarily to an increase of $150.1 million in payments for acquired businesses during the fiscal year ended October 31, 2016.

Financing Activities Net cash provided by financing activities for the fiscal year ended October 31, 2016 was $24.4 million, compared to $133.6 million of cash used for the fiscal year ended October 31, 2015, a $157.9 million change, due primarily to $180.6 million additional borrowings for business acquisitions and stock repurchases, which was partially offset by a $9.7 million decrease in stock repurchases and an $8.1 million decrease in proceeds from issuance of common stock through employee equity incentive plans in the current year compared to the prior year.

Contractual Obligations The following table summarizes our contractual obligations as of October 31, 2017 (in thousands):

Years Ended October 31, 2018 2019 2020 2021 2022 Thereafter Total Amended and restated Credit Agreement (1) ...... $ 91,490 $595,103 $ 9,541 $192,488 $ — $ — $ 888,622 Operating leases (2) ...... 39,717 28,528 23,250 16,333 9,520 7,481 124,829 Minimum purchase obligations . . . 145,374 36,000 36,000 — — — 217,374 Other loans ...... 7,555 2,404 1,065 82 36 245 11,387 Total ...... $284,136 $662,035 $69,856 $208,903 $9,556 $7,726 $1,242,212

(1) Contractual obligations for the amended and restated Credit Agreement include interest calculated using the rate in effect as of October 31, 2017 applied to the expected outstanding debt balance considering the minimum principal payments due each year.

62 2017 10-K (2) Operating leases include $50.3 million of minimum contractual obligations on leases for our taxi solutions business where payments are based upon the number of operational taxicabs with our advertising displays as of October 31, 2017. On December 11, 2017, we divested our Taxi Solutions business and the buyer assumed responsibility for these operating lease commitments.

As of October 31, 2017, our contractual obligations consist of obligations under debt, capital leases, operating leases, purchase commitments and other contractual obligations. On April 3, 2017, we committed to purchase $144 million of components over a four year period, a total of $36 million each year, to lock in pricing from one of our existing suppliers. As of October 31, 2017, our remaining non-cancelable commitment under this agreement totaled $103.9 million.

As of October 31, 2017, the amount payable for unrecognized tax benefits was $37.4 million, including accrued interest and penalties, none of which is expected to be paid within one year. This amount is included in Other long-term liabilities in our Consolidated Balance Sheets as of October 31, 2017. We are unable to make a reasonably reliable estimate as to when cash settlement with the applicable taxing authorities may occur.

As of October 31, 2017 we have agreed to guarantee, in certain circumstances, up to $12.5 million of debt that was issued to Gas Media. We are unable to make a reasonably reliable estimate as to when or if we will need to pay this guaranteed debt.

Off-Balance Sheet Arrangements We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies and Estimates General Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting policies are more fully described in Note 1, Principles of Consolidation and Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. On an ongoing basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our Consolidated Financial Statements. We believe that the following discussion addresses our most critical accounting policies.

Assets held for sale We are required to estimate the fair values of assets held for sale. Critical estimates in valuing assets held for sale include, but are not limited to, expected consideration from potential sales transactions, costs to complete potential sales transactions and estimated future cash flows from the associated assets or businesses. Future expected cash flows are estimated based on the current financial performance of the assets or associated business, adjusted by expected future growth rates and discount rates. Discount rates reflect the nature of the assets held for sale and the perceived risk of the underlying cash flows.

During the fiscal year 2017, we assessed the fair value of the taxi assets held for sale, considering potential sale transactions and expected future cash flows and categorized it as Level 3 in the fair value hierarchy, and recorded charges totaling $50.2 million to write those assets down to their fair value as of October 31, 2017.

Goodwill We review the goodwill allocated to each of our reporting units for possible impairment annually on August 1 and whenever events or changes in circumstances indicate its carrying amount may not be recoverable. When

2017 10-K 63 assessing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform an impairment test. If, we conclude otherwise, then no further action is taken. When performing an impairment test, we have the option to perform a qualitative or quantitative assessment. In a quantitative impairment test, we measure the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit, and record an impairment charge for any excess.

In assessing the qualitative factors, we assess relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting unit’s fair value or carrying amount involves significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry, and market considerations, cost factors, overall financial performance, Verifone-specific events, and share price trends, and making the assessment as to whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact.

The carrying amount of each reporting unit is determined based upon the assignment of our assets and liabilities, including existing goodwill and other intangible assets, to the identified reporting units. Where an acquisition benefits only one reporting unit, we allocate, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. Where we have had an acquisition that benefited more than one reporting unit, we have assigned the goodwill to our reporting units as of the acquisition date such that the goodwill assigned to a reporting unit is the excess of the fair value of the acquired business, or portion thereof, to be included in that reporting unit over the fair value of the individual assets acquired and liabilities assumed that are assigned to the reporting unit.

The estimated fair value of the reporting units is determined using the income approach. The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost savings, tax deductions, and proceeds from disposition. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the particular investment. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows.

In order to assess the reasonableness of the calculated fair values of its reporting units, we compare the sum of the reporting units’ fair values to our market capitalization and calculate an implied control premium (the excess of the sum of the reporting units’ fair values over the market capitalization). We evaluate the reasonableness of the premium over market capitalization by first quantifying certain controlling market participants’ synergies included in the income approach. We then supplement this step by comparing the implied premiums for each reporting unit to the premiums implied by recent comparable transactions. If the implied control premium is not reasonable in light of these recent transactions, we will reevaluate our fair value estimates of the reporting units by adjusting the discount rates or other assumptions.

In the event that we realign our reporting units, we allocate our goodwill to the new reporting units using the relative fair value approach. We perform an assessment of any potential goodwill impairment immediately prior to and after the reallocation of goodwill to the new reporting units.

During the fiscal year 2017, there were circumstances which indicated that the carrying amount of the goodwill related to our former Taxi Solutions reporting unit may not be recoverable. Based on a quantitative assessment, considering potential sale transactions, we concluded that the goodwill was impaired, and recorded a $17.4 million impairment charge for the fiscal year ended October 31, 2017.

64 2017 10-K Equity Investments We evaluate our equity investments to determine whether an investee is a variable interest entity. If we conclude that an investee is a variable interest entity, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a variable interest entity, we consolidate such entity and reflect the noncontrolling interest of other beneficiaries of that entity. If we conclude that an investee is not a variable interest entity, we do not consolidate the investee and account for the investment under either the equity method or cost method.

The determination of whether an entity is a variable interest entity and or whether we are the primary beneficiary of the entity is highly judgmental. The fair value of our equity investments is dependent on the performance of the investee companies as well as volatility inherent in the external markets for these investments. In assessing the potential impairment of these investments, we consider these factors as well as the forecasted financial performance of the investees and market values, where available. If these forecasts are not met or market values indicate an other-than-temporary decline in value, impairment charges may be required.

Income Taxes Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. In evaluating our ability to recover our deferred tax assets we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in past fiscal years, and our forecast of future taxable income in the jurisdictions in which we have operations.

We have placed a valuation allowance on the U.S. deferred tax assets and certain non-U.S. deferred tax assets, because realization of these tax benefits through future taxable income does not meet the more-likely- than-not threshold. We intend to maintain the valuation allowances until sufficient positive evidence exists to support the reversal of the valuation allowances.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws. Our estimate for the potential outcome of any uncertain tax issue is based on the detailed facts and circumstances of each issue. For example, during the fourth quarter of fiscal 2014, the Israeli Tax Authorities issued a tax assessment for 2008 or 2009 claiming there was a business restructuring that resulted in a transfer of some functions, assets and risks from Israel to the U.S. parent company treated as an equity sale. We are appealing the tax assessment and believe the Israeli Tax Authority’s assessment position is without merit. We intend to continue to challenge the Israeli Tax Authorities position vigorously. If this matter is litigated and the Israeli Tax Authorities are able to successfully sustain their position, our results of operations and financial condition could be materially and adversely affected. See further discussion in Note 6, Income Taxes, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We re-evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period.

Revenue Recognition While the majority of our sales transactions contain standard business terms and conditions, there are some transactions that contain non-standard business terms and conditions, and, as a result, significant contract

2017 10-K 65 interpretation is sometimes required to determine whether an arrangement exists and what is included in the arrangement. In addition, our revenue recognition policy requires an assessment as to whether collection is probable, which inherently requires us to evaluate the creditworthiness of our customers.

We enter into arrangements with customers that include multiple deliverables. Significant judgment is required to determine the appropriate accounting for multiple element arrangements including: (1) whether elements represent separate deliverables; (2) the estimated selling price (ESP) for each deliverable; (3) the arrangement consideration to be allocated among the deliverables; (4) when to recognize net revenues on the deliverables; and (5) whether undelivered elements are essential to the functionality of delivered elements. Further, our determination of ESP involves assessing factors such as the cost to produce the deliverable, the anticipated margin on that deliverable, the economic conditions and trends, the selling price and profit margin for similar parts, and our ongoing pricing strategy and policies.

Warranty Costs We accrue for estimated warranty obligations at the time that revenue is recognized, and base those accruals on an estimate of future warranty costs for the delivered product. Our warranty obligation generally extends from one to three years from the date of shipment. We estimate such obligations based on the size of the installed base of products subject to warranty protection, historical and projected warranty claim rates, historical and projected costs associated with claims, and knowledge of specific product failures that are outside of our typical experience. Our estimates and judgments are affected by actual product failure rates and actual costs to repair. These estimates and judgments are more subjective for new product introductions as these estimates and judgments are based on our experience for similar products because we do not yet have actual history or experience for new products.

From time to time we encounter situations where our costs of warranty on a product vary significantly from expectations due to factors including defective parts, defective workmanship, or other unanticipated environmental or usage patterns. When encountered, a specific reserve is established for these situations on a case-by-case basis, and best available estimates are used to quantify the potential exposure.

Allowance for doubtful accounts We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to pay their invoices to us in full. We regularly review the adequacy of our allowance for doubtful accounts, considering the size of each customer’s accounts receivable balance, their expected ability to pay, aging of their accounts receivable balances, and our collection history with them. An appropriate provision is made taking into account these factors. The level of reserves for our customer accounts receivable fluctuates depending upon all of the factors mentioned above, and could change significantly if our customers’ financial condition changes or the economy in general deteriorates.

Inventory Valuation and Liability for Purchase Commitments with Contract Manufacturers and Suppliers The valuation of inventories requires us to determine obsolete or excess inventory, and inventory that is not of salable quality. The determination of obsolete or excess inventories requires us to estimate the future demand for our products within specific time horizons, generally six months. If our demand forecast for specific products is greater than actual demand and we fail to reduce manufacturing output accordingly, we could be required to record additional inventory write-offs, which would have a negative impact on our gross margin percentage.

We review the adequacy of our inventory valuation on a quarterly basis. For production inventory, our methodology involves an assessment of the marketability of the product based on a combination of shipment history and future demand. We then evaluate the inventory found to be in excess and take appropriate write- downs to reflect the risk of obsolescence. Our evaluation depends on the accuracy of our sales estimates. If actual demand was substantially lower than estimated, additional inventory write-downs for excess or obsolete inventories may be required.

We record accruals for estimated cancellation fees related to orders placed with our suppliers that have been canceled or are expected to be canceled. Consistent with industry practice, we acquire inventory through a

66 2017 10-K combination of purchase orders, supplier contracts, and open orders based on projected demand information. These commitments typically cover our requirements for periods ranging from one to five months. If there is an abrupt and substantial decline in demand for one or more of our products or an unanticipated change in technological requirements for any of our products, we may be required to record additional accruals for cancellation fees that would negatively affect our results of operations in the period when the cancellation fees are identified and recorded.

Long-Lived Assets We make judgments about the recoverability of long-lived assets, including fixed assets and purchased finite- lived intangible assets whenever events or changes in circumstances indicate that an impairment may exist. Each period we evaluate the estimated remaining useful lives of long-lived assets and whether events or changes in circumstances warrant a revision to the remaining periods of depreciation or amortization. If circumstances arise that indicate an impairment may exist, we use an estimate of the undiscounted value of expected future operating cash flows to determine whether the long-lived assets are impaired. Long-lived assets will be evaluated for impairment either individually or in asset groups where their cash flows are largely independent of cash flows generated from other long-lived assets. If the aggregate undiscounted cash flows are less than the carrying amount of the assets, the resulting impairment charge to be recorded is calculated based on the excess of the carrying amount of the assets over the fair value of such assets, with the fair value generally determined using the DCF method. Application of the DCF method for long-lived assets requires judgment and market participant assumptions related to the amount and timing of future expected cash flows, terminal value growth rates, and appropriate discount rates. Different judgments or assumptions could result in materially different fair value estimates.

Contingencies and Litigation The outcome of litigation is inherently uncertain and subject to numerous factors outside of our control. Significant judgment is required when we assess the likelihood of any adverse judgments or outcomes to a potential claim or legal proceeding and, if and when the outcomes of the claims or proceedings are probable and/ or reasonably estimable the potential ranges of probable or reasonable possible losses. A determination of the amount of accrued liabilities required, if any, for these contingencies is made after the analysis of each matter. Because of uncertainties related to these matters, we base our estimates on the information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation, and may revise our estimates. Any revisions in the estimates of potential liabilities could have a material impact on our results of operations and financial position.

Recent Accounting Pronouncements Information with respect to recent accounting pronouncements may be found in Note 1, Principles of Consolidation and Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K, which section is incorporated herein by reference.

2017 10-K 67 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial results.

Interest Rate Risk We are exposed to interest rate risk related to our borrowings. These borrowings generally bear interest based upon the one-month LIBOR rate. As of October 31, 2017, a 100 basis point increase in interest rates on our borrowings subject to variable interest rate fluctuations would increase our interest expense by approximately $5.7 million annually.

As of October 31, 2017, we had outstanding interest rate swap agreements to effectively convert $400.0 million of the term A loan from a floating rate plus applicable margin to a 1.20% fixed rate plus applicable margin through March 30, 2018. In addition, we have an outstanding interest rate swap agreement to effectively convert $350.0 million of the term A loan to a fixed rate of 0.975% plus applicable margin from March 30, 2018 through June 30, 2019.

We generally hold most of our cash in non-interest bearing bank accounts. However, some of the funds are placed in overnight and short-term instruments, which would earn more interest income if market interest rates rise and less interest income if market interest rates fall.

Foreign Currency Transaction Risk Customers outside the U.S. account for a substantial majority of our sales. A substantial portion of the net revenues we generate from international sales is denominated in currencies other than the U.S. dollar, particularly the Euro, Brazilian real, Swedish krona, Australian dollar, and the British pound. Additionally, portions of our cost of net revenues and operating expenses are incurred by our international operations and are denominated in currencies other than the U.S. dollar. For consolidated reporting, net revenues and expenses denominated in currencies other than the U.S. dollar, which we refer to as Income Statement Exposures, are translated to the U.S. dollar at average currency exchange rates for the period. Thus, even if foreign operating results were stable, fluctuating currency rates may produce volatile reported results. We have from time to time made efforts to mitigate Income Statement Exposures by hedging with currency derivatives. As of October 31, 2017 and 2016, we had no derivatives related to Income Statement Exposures. We may in the future use foreign exchange forward contracts or other derivatives to hedge Income Statement Exposures, depending upon the risks of the exposures, the costs of hedging, and other considerations. However, hedges of Income Statement Exposures will only mitigate a portion of our risk and only for a short period.

The balance sheets of our subsidiaries may have monetary assets and liabilities denominated in currencies other than the primary currency of such business, which we refer to as Balance Sheet Exposures. For example, Balance Sheet Exposures would include Canadian dollar receivables held in a subsidiary where the Canadian dollar is not the primary currency, such as our U.S. business, or U.S. dollar payables held by our U.K. subsidiary. As exchange rates fluctuate, Balance Sheet Exposures generate foreign currency transaction gains and losses, which are included in Other income (expense), net in our Consolidated Statements of Operations. Most Balance Sheet Exposures will settle in a currency other than the functional currency in the foreseeable future or convert from a foreign currency to a local currency in the foreseeable future, at which time the impact of rate fluctuations will be realized and we will receive or dispense more or less cash than the value originally recorded. We refer to such exposures as Near-Term Balance Sheet Exposures. Some Balance Sheet Exposures may not be settled in the foreseeable future in management’s estimation and thus the cash impact of their currency gains or losses is not expected to be realized in the foreseeable future.

We have in the past and expect to continue to enter into foreign exchange forward contracts to mitigate the risk of Near-Term Balance Sheet Exposures. Our objective is to have gains or losses from the foreign exchange forward contracts largely offset the losses or gains of the Near-Term Balance Sheet Exposures. On a monthly basis, we recognize the gains or losses based on the changes in fair value of these contracts in Other income (expense), net in our Consolidated Statements of Operations. In some instances, we may seek to hedge transactions that are expected to become Near-Term Balance Sheet Exposures in the very short-term, generally within one month. We do not use foreign exchange forward contracts or other derivatives for speculative or trading purposes.

68 2017 10-K Our outstanding foreign exchange forward contracts as of October 31, 2017 are presented in the table below (in thousands). The fair value of the contracts represents the difference between the spot currency rate at October 31, 2017 and the contracted rate. All of these forward contracts mature within 30 days of October 31, 2017.

Fair Local Market Currency Value at Contract Contracted October 31, Currency Amount Currency Amount 2017 Contracts to (buy) sell non-USD currencies: Argentine peso ...... ARS (160,000) USD 8,937 $ 30 Australian dollar ...... AUD (17,000) USD 13,011 (7) British Pound ...... GBP (12,000) USD 15,752 6 Canadian dollar ...... CAD (16,000) USD 12,417 (16) Euro ...... EUR 53,000 USD (61,532) (12) Indian rupee ...... INR 250,000 USD (3,841) 13 Israeli shekel ...... ILS 195,000 USD (55,092) 163 Mexican peso ...... MXN (110,000) USD 5,714 5 New Taiwan dollar ...... TWD (150,000) USD 4,964 (22) New Zealand dollar ...... NZD (4,000) USD 2,747 — Norwegian Kroner ...... NOK 200,000 USD (24,472) (10) South African rand ...... ZAR (140,000) USD 9,851 21 South Korean won ...... KRW (4,000,000) USD 3,551 (26) Swedish Krona ...... SEK 160,000 USD (19,137) (14) Thai Baht ...... THB (300,000) USD 9,010 1 Turkish Lira ...... TRY (20,000) USD 5,206 (9) Total fair value ...... $123

As of October 31, 2017, our Balance Sheet Exposures amounted to $269.6 million. These Balance Sheet Exposures were partially offset by foreign exchange forward contracts with a notional amount of $255.4 million. Based on our net exposures as of October 31, 2017, a 10% fluctuation in currency exchange rates would result in a gain or loss of approximately $1.4 million.

Our efforts to mitigate the risk of foreign currency fluctuations in our Balance Sheet Exposures through the use of foreign exchange forward contracts may not always be effective in protecting us against currency exchange rate fluctuations, particularly in the event of imprecise forecasts of non-functional currency denominated assets and liabilities. In addition, at times we have not fully offset our Balance Sheet Exposures for reasons such as the high cost of hedging certain currencies, leaving us at risk for foreign exchange gains and losses on amounts not offset by forward contracts. Furthermore, historically we have not consistently hedged our Income Statement Exposures. Accordingly, if there were an adverse movement in exchange rates, we might suffer significant losses.

2017 10-K 69 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm ...... 71 Consolidated Statements of Operations for the fiscal years ended October 31, 2017, 2016 and 2015 ...... 73 Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended October 31, 2017, 2016 and 2015 ...... 74 Consolidated Balance Sheets at October 31, 2017 and 2016 ...... 75 Consolidated Statements of Equity for the fiscal years ended October 31, 2017, 2016 and 2015 ...... 76 Consolidated Statements of Cash Flows for the fiscal years ended October 31, 2017, 2016 and 2015 ...... 77 Notes to Consolidated Financial Statements ...... 78

70 2017 10-K REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of VeriFone Systems, Inc. We have audited the accompanying consolidated balance sheets of VeriFone Systems, Inc. as of October 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended October 31, 2017. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of VeriFone Systems, Inc. at October 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for each of the three years in the period ended October 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), VeriFone Systems, Inc.’s internal control over financial reporting as of October 31, 2017, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated December 18, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

San Jose, California December 18, 2017

2017 10-K 71 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of VeriFone Systems, Inc. We have audited VeriFone Systems, Inc.’s internal control over financial reporting as of October 31, 2017, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). VeriFone Systems, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, VeriFone Systems, Inc. maintained, in all material respects, effective internal control over financial reporting as of October 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of VeriFone Systems, Inc. as of October 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended October 31, 2017 and our report dated December 18, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

San Jose, California December 18, 2017

72 2017 10-K VERIFONE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended October 31, 2017 2016 2015 (In thousands, except per share data) Net revenues: Systems ...... 1,085,478 1,236,361 1,309,628 Services ...... 785,498 755,788 690,829 Total net revenues ...... 1,870,976 1,992,149 2,000,457 Cost of net revenues: Systems ...... 688,555 744,311 773,816 Services ...... 469,409 453,527 400,658 Total cost of net revenues ...... 1,157,964 1,197,838 1,174,474 Gross margin ...... 713,012 794,311 825,983 Operating expenses: Research and development ...... 211,615 207,503 198,135 Sales and marketing ...... 193,982 217,039 224,745 General and administrative ...... 189,635 204,552 203,978 Restructuring and related charges ...... 143,152 41,254 8,429 Litigation settlement and loss contingency expense ...... — 650 1,213 Amortization of purchased intangible assets ...... 69,622 90,534 82,492 Goodwill impairment ...... 17,384 — — Total operating expenses ...... 825,390 761,532 718,992 Operating income (loss) ...... (112,378) 32,779 106,991 Interest expense, net ...... (33,197) (34,564) (31,455) Other income (expense), net ...... 2,756 3,612 (2,588) Income (loss) before income taxes ...... (142,819) 1,827 72,948 Income tax provision (benefit) ...... 32,500 11,527 (7,409) Consolidated net income (loss) ...... (175,319) (9,700) 80,357 Net income (loss) attributable to noncontrolling interests ...... (1,490) (419) 1,260 Net income (loss) attributable to VeriFone Systems, Inc. stockholders ...... $ (173,829) $ (9,281) $ 79,097 Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Basic ...... $ (1.55) $ (0.08) $ 0.69 Diluted ...... $ (1.55) $ (0.08) $ 0.68 Weighted average number of shares used in computing net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Basic ...... 111,817 110,829 114,044 Diluted ...... 111,817 110,829 115,934

The accompanying notes are an integral part of these consolidated financial statements.

2017 10-K 73 VERIFONE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years Ended October 31, 2017 2016 2015 ( In thousands) Consolidated net income (loss) ...... $(175,319) $ (9,700) $ 80,357 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ...... 60,512 (46,618) (183,895) Unrealized gain (loss) on derivatives designated as cash flow hedges Change in unrealized gain (loss) on derivatives designated as cash flow hedges ...... 3,062 (1,971) (7,830) Amounts reclassified from Accumulated other comprehensive loss ...... 1,171 3,961 4,141 Net change in unrealized gain (loss) on derivatives designated as cash flow hedges ...... 4,233 1,990 (3,689) Change in other ...... 1,966 (4,045) 93 Other comprehensive income (loss) ...... 66,711 (48,673) (187,491) Total comprehensive loss ...... (108,608) (58,373) (107,134) Less: Comprehensive income (loss) attributable to noncontrolling interests, net oftax...... (9,201) (419) 1,260 Comprehensive loss attributable to VeriFone Systems, Inc. stockholders ...... $ (99,407) $(57,954) $(108,394)

The accompanying notes are an integral part of these consolidated financial statements.

74 2017 10-K VERIFONE SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS

October 31, 2017 2016 (In thousands, except par value) ASSETS Current assets: Cash and cash equivalents ...... $ 131,029 $ 148,352 Accounts receivable, net of allowances of $7,900 and $9,240, respectively .... 322,667 323,447 Inventories ...... 126,563 175,231 Prepaid expenses and other current assets ...... 138,396 110,397 Total current assets ...... 718,655 757,427 Property and equipment, net ...... 127,872 202,277 Purchased intangible assets, net ...... 236,378 306,298 Goodwill ...... 1,104,370 1,110,493 Deferred tax assets, net ...... 33,089 36,989 Other long-term assets ...... 101,806 81,323 Total assets ...... $2,322,170 $2,494,807 LIABILITIES AND EQUITY Current liabilities: Accounts payable ...... $ 144,761 $ 154,574 Accruals and other current liabilities ...... 227,295 213,411 Deferred revenue, net ...... 101,427 104,797 Short-term debt ...... 68,770 66,017 Total current liabilities ...... 542,253 538,799 Long-term deferred revenue, net ...... 61,788 66,516 Deferred tax liabilities, net ...... 97,524 99,371 Long-term debt ...... 762,044 859,896 Other long-term liabilities ...... 76,089 76,840 Total liabilities ...... 1,539,698 1,641,422 Commitments and contingencies Redeemable noncontrolling interest in subsidiary ...... 262 4,980 Stockholders’ equity: Preferred stock: $0.01 par value, 10,000 shares authorized, no shares issued and outstanding ...... — — Common stock: $0.01 par value, 200,000 shares authorized, 112,367 and 111,261 shares issued and outstanding as of October 31, 2017 and 2016, respectively . . 1,124 1,113 Additional paid-in capital ...... 1,812,209 1,771,951 Accumulated deficit ...... (792,168) (618,339) Accumulated other comprehensive loss ...... (266,572) (340,994) Total VeriFone Systems, Inc. stockholders’ equity ...... 754,593 813,731 Noncontrolling interests in subsidiaries ...... 27,617 34,674 Total equity ...... 782,210 848,405 Total liabilities, redeemable noncontrolling interest in subsidiary and equity . . $2,322,170 $2,494,807

The accompanying notes are an integral part of these consolidated financial statements.

2017 10-K 75 VERIFONE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF EQUITY

Common Stock Accumulated Non- Voting Additional Other Total controlling Paid-in Accumulated Comprehensive Stockholders’ interest in Total Shares Amount Capital Deficit Income (Loss) Equity subsidiaries Equity (In thousands) Balance as of October 31, 2014 ..... 113,314 $1,133 $1,675,695 $(538,208) $(104,830) $1,033,790 $36,108 $1,069,898 Issuance of common stock, net of issuance costs ...... 1,828 19 12,885 — — 12,904 — 12,904 Tax payments related to restricted stock units ...... — — (4,571) — — (4,571) — (4,571) Stock-based compensation expense ...... — — 42,253 — — 42,253 — 42,253 Tax effects of stock-based compensation ...... — — (268) — — (268) — (268) Stock repurchases ...... (2,458) (27) — (76,605) — (76,632) — (76,632) Adjustment on redemption of noncontrolling interest ...... — — 422 — — 422 — 422 Dividends paid to noncontrolling interests shareholders ...... — — — — — — (2,412) (2,412) Total comprehensive income (loss) ...... — — — 79,097 (187,491) (108,394) 1,241 (107,153) Balance as of October 31, 2015 ..... 112,684 1,125 1,726,416 (535,716) (292,321) 899,504 34,937 934,441 Issuance of common stock, net of issuance costs ...... 1,411 14 5,061 — — 5,075 — 5,075 Tax payments related to restricted stock units ...... — — (1,969) — — (1,969) — (1,969) Stock-based compensation expense ...... — — 42,278 — — 42,278 — 42,278 Tax effects of stock-based compensation ...... — — 165 — — 165 — 165 Stock repurchases ...... (2,834) (26) — (73,342) — (73,368) — (73,368) Dividends paid to noncontrolling interests shareholders ...... — — — — — — (2,293) (2,293) Total comprehensive income (loss) ...... — — — (9,281) (48,673) (57,954) 2,030 (55,924) Balance as of October 31, 2016 ..... 111,261 1,113 1,771,951 (618,339) (340,994) 813,731 34,674 848,405 Issuance of common stock, net of issuance costs ...... 1,106 11 1,136 — — 1,147 — 1,147 Tax payments related to restricted stock units ...... — — (1,692) — — (1,692) — (1,692) Stock-based compensation expense ...... — — 40,814 — — 40,814 — 40,814 Dividends paid to noncontrolling interests shareholders ...... — — — — — — (2,574) (2,574) Total comprehensive income (loss) ...... — — — (173,829) 74,422 (99,407) (4,483) (103,890) Balance as of October 31, 2017 ..... 112,367 $1,124 $1,812,209 $(792,168) $(266,572) $ 754,593 $27,617 $ 782,210

The accompanying notes are an integral part of these consolidated financial statements.

76 2017 10-K VERIFONE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended October 31, 2017 2016 2015 (In thousands) Cash flows from operating activities Consolidated net income (loss) ...... $(175,319) $ (9,700) 80,357 Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities: Depreciation and amortization ...... 140,727 179,236 169,400 Stock-based compensation expense ...... 40,013 42,278 42,253 Deferred income taxes, net ...... 835 (13,980) (31,574) Non-cash restructuring and related charges ...... 114,534 31,208 — Goodwill and other long lived asset impairments ...... 33,524 — 1,076 Other ...... 5,483 (6,225) 11,974 Net cash provided by operating activities before changes in operating assets and liabilities ...... 159,797 222,817 273,486 Changes in operating assets and liabilities: Accounts receivable, net ...... (11,597) 59,600 (75,432) Inventories ...... 30,402 (45,679) (16,415) Prepaid expenses and other assets ...... (8,600) 4,475 (18,092) Accounts payable ...... (7,561) (39,571) 41,206 Deferred revenue, net ...... (6,984) 28,708 12,707 Other current and long-term liabilities ...... 10,509 (32,914) 30,669 Net change in operating assets and liabilities ...... 6,169 (25,381) (25,357) Net cash provided by operating activities ...... 165,966 197,436 248,129 Cash flows from investing activities Capital expenditures ...... (67,324) (105,335) (106,492) Acquisitions of businesses, net of cash and cash equivalents acquired ..... (4,973) (172,219) (22,072) Divestiture of businesses ...... 1,469 — — Other investing activities, net ...... (1,878) 2,365 115 Net cash used in investing activities ...... (72,706) (275,189) (128,449) Cash flows from financing activities ...... Proceeds from debt, net of issuance costs ...... 276,085 560,378 125,000 Repayments of debt ...... (385,744) (453,054) (198,289) Stock repurchases ...... — (79,866) (70,134) Other financing activities, net ...... (2,798) (3,099) 9,865 Net cash provided by (used in) financing activities ...... (112,457) 24,359 (133,558) Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash ...... 3,745 (3,294) (29,214) Net decrease in cash, cash equivalents and restricted cash ...... (15,452) (56,688) (43,092) Cash, cash equivalents and restricted cash, beginning of period ...... 159,181 215,869 258,961 Cash, cash equivalents and restricted cash, end of period ...... $143,729 $ 159,181 $ 215,869 Supplemental disclosures of cash flow information Cash paid for interest ...... $ 29,465 $ 29,757 $ 27,301 Cash paid for income taxes ...... $ 29,532 $ 28,203 $ 20,529

The accompanying notes are an integral part of these consolidated financial statements.

2017 10-K 77 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Principles of Consolidation and Summary of Significant Accounting Policies Business Description We are a global leader in payments and commerce solutions. We provide expertise, solutions and services that add value at the retail point-of-sale and enable innovative forms of commerce. For over 35 years, we have been designing, manufacturing, marketing and supplying a broad range of payment solutions, including customer payments acceptance, connectivity between merchants and financial institutions, as well as security and comprehensive payment and commerce services. We focus on delivering innovative point-of-sale payment capabilities, value-added services that increase merchant revenues and enhance the consumer experience, and solutions that enrich and improve the interaction between merchant and consumers. Today we are an industry leader in multi-application payment systems deployments. Key industries in which we operate include financial services, retail, petroleum, restaurant, hospitality, taxi, transportation, and healthcare.

VeriFone Systems, Inc. was incorporated in the state of Delaware on June 13, 2002 in order to acquire VeriFone, Inc. on July 1, 2002. VeriFone, Inc. was incorporated in 1981 and became our principal operating subsidiary on July 1, 2002. Effective May 18, 2010, we changed our corporate name from VeriFone Holdings, Inc. to VeriFone Systems, Inc. Shares of VeriFone Systems, Inc. are listed on the New York Stock Exchange under the trading symbol PAY.

Basis of Presentation The accompanying Consolidated Financial Statements include the accounts of VeriFone Systems, Inc. and our wholly-owned and majority-owned subsidiaries, including a variable interest entity where we are deemed to be the primary beneficiary. Amounts pertaining to the noncontrolling ownership interests held by third parties in the operating results and financial position of our majority-owned subsidiaries are reported as noncontrolling interests. All intercompany accounts and transactions have been eliminated. The Consolidated Financial Statements also include the results of companies acquired by us from the date of each acquisition. Investments in businesses that we do not control, but in which we have the ability to exercise significant influence over operating and financial matters, are accounted for using the equity method.

We have two operating segments: Verifone Systems and Verifone Services. Verifone Systems delivers point of sale electronic payment devices that run our unique operating systems, security and encryption software and certified payment software for both payments and commerce. Verifone Services delivers device related services and maintenance, payment transaction routing and reporting, and commerce based services. Our reportable segments and reporting units are the same as our operating segments.

We determine our operating segments considering our overall management structure, how forecasts are approved, how executive compensation is determined, our organizational chart, as well as how our Chief Executive Officer, who is our chief operating decision maker, regularly reviews our operating results, assesses performance, allocates resources, and makes decisions regarding Verifone’s operations.

Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions about future events that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. We evaluate our estimates on an ongoing basis when updated information related to such estimates becomes available. We base our estimates on historical experience and information available to us at the time these estimates are made. Actual results could differ materially from these estimates.

Significant Accounting Policies Foreign Currency We determine the functional currency for Verifone and our subsidiaries by reviewing the currencies in which their respective operating activities occur. For our subsidiaries whose functional currencies are not the

78 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

U.S. Dollar, we generally translate assets and liabilities using exchange rates in effect as of the applicable balance sheet dates. Revenue and expenses for these subsidiaries are translated using average rates which approximate those in effect during the period. Foreign currency translation gains and losses are included in stockholders’ equity as a component of Accumulated other comprehensive loss in our Consolidated Balance Sheets.

Monetary assets and liabilities denominated in currencies other than the functional currency of that subsidiary are remeasured to the functional currency using exchange rates in effect as of the applicable balance sheet dates. Gains and losses from these remeasurements are recorded as Other income (expense), net in our Consolidated Statements of Operations.

Revenue Recognition System solutions net revenues include net revenues from the sale of products and associated perpetual software licenses and accessories. Services net revenues include net revenues from payment-related services, installation, customer support, repair services related to our System solutions, transaction processing, custom software development, and extended warranties, as well as from advertising in and on taxis, and leases of our products.

We recognize revenues net of sales taxes and value-added taxes when title and risk of loss have passed to the customer and all of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collection is reasonably assured and not contingent upon future performance.

Net revenues from sales to end-users, resellers, value-added resellers, and distributors are generally recognized upon shipment of the product. End-users, resellers, value-added resellers, and distributors generally have no rights of return, stock rotation rights, or price protection.

We recognize revenue from operating lease arrangements over the term of the applicable lease arrangements. Net revenues from operating lease arrangements represent less than 5% of our total net revenues and are classified as Services net revenues.

Net revenues from services obligations to be provided over a period of time are initially deferred and then recognized on a straight-line basis over the period during which the services are provided. Net revenues from services billed on a per incident basis are recognized as the services are rendered. Net revenues from fees for payment services are recognized when the payment services are complete. Advertising revenues are recognized as the related services are performed.

We periodically enter into software development contracts with our customers that we recognize as net revenues on a completed contract basis. During the period of performance of such contracts, billings and costs are accumulated on the balance sheet, but no profit is recorded before completion or substantial completion of the project or milestone. We generally use customers’ acceptance as the specific criteria to determine when such contracts are substantially completed. Provisions for losses on software development contracts are recorded in the period they become evident. Net revenues from software development contracts comprise less than 1% of our total net revenues.

Revenue Recognition for Multiple-Element Arrangements When an arrangement includes multiple deliverables, we allocate the arrangement consideration to each deliverable qualifying as a separate unit of accounting based on its relative selling price at the inception of the arrangement. We determine the relative selling price based on the estimated selling price (ESP) using vendor specific objective evidence (VSOE), if it exists, and otherwise third-party evidence (TPE). If neither VSOE nor TPE exists for a unit of accounting, we use best estimated selling price (BESP).

2017 10-K 79 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

VSOE is limited to the price charged when the same or similar product or service is sold separately. We define VSOE as substantial standalone transactions that are priced within a narrow range, as defined by us. In addition, we consider the geographies in which the products or services are sold, as well as the class of customers to which the products or services are sold. If a product or service is seldom sold separately, it is unlikely that we can determine VSOE for the product or service.

TPE is determined based on the prices charged by our competitors for a similar deliverable when sold separately to similarly situated customers. As our products and services contain a significant level of differentiation compared to our competitors’ products, comparable prices are generally not available.

When we are unable to establish selling price using VSOE or TPE, we use BESP when allocating the arrangement consideration. BESP is the price at which management estimates that we would enter into a transaction with the customer if the product or service was to be sold by us regularly on a standalone basis. Our determination of BESP involves a weighting of several factors based on the specific facts and circumstances of the arrangement. The factors we consider include the geographies in which the products or services are sold, the anticipated gross margin on that deliverable, the cost to produce the deliverable, economic conditions and market trends, the selling price and gross margin for similar deliverables, and our ongoing pricing strategy and policies.

We analyze ESP at least annually or on a more frequent basis if a significant change in our business necessitates a more timely analysis or if we experience significant variances in our selling prices.

In multiple element arrangements that include software, we first evaluate if a tangible product includes software. If a tangible product includes software and if both the tangible product and software components function together to deliver the tangible product’s essential functionality, then we will treat the entire product as a non-software element. If the arrangement is deemed to have a software element, we first allocate the total arrangement consideration between the software group of elements as a whole and the non-software elements as a whole based on their relative selling prices, and then to the elements within those groups based on the applicable guidance.

Shipping and Handling Costs Shipping and handling costs incurred for delivery to customers are expensed as incurred, and are included in Cost of net revenues in our Consolidated Statements of Operations. In those instances where we bill shipping and handling costs to customers, the amounts billed are classified as Net revenues in our Consolidated Statements of Operations.

Warranty Costs We accrue for estimated warranty obligations when revenue is recognized based on an estimate of future warranty costs for delivered products. Such estimates are based on historical experience and expectations of future costs. At least annually or whenever circumstances warrant, we evaluate and adjust the accrued warranty costs to the extent actual warranty costs vary from the original estimates. Our warranty period typically extends from one to three years from the date of shipment. Actual warranty costs may differ materially from management’s estimates.

Costs associated with maintenance contracts, including extended warranty contracts, are expensed when they are incurred.

Stock-Based Compensation We measure stock-based compensation cost at the grant date, based on the estimated fair value of the award and the estimated number of shares we ultimately expect will vest. Stock-based compensation cost is recognized as expense on a straight-line basis over the requisite service period. Cash flows resulting from the tax benefits due to tax deductions in excess of the compensation cost recognized for those awards are classified as financing cash flows.

80 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Advertising Costs Advertising costs are expensed as incurred, and were immaterial for all periods presented in our Consolidated Statements of Operations.

Research and Software Development Costs Research and development costs are generally expensed when incurred.

Software development costs incurred to develop software products for resale, including the costs of software components of our products, are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a software or product is available for general release to customers. In most instances, our products are released soon after technological feasibility has been established; therefore, software development costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally most software development costs have been expensed as incurred. Capitalized costs of software for resale are amortized on a straight-line basis over the estimated life of the software or associated product, generally three to five years, commencing when the respective software or product is available to customers.

Software development costs for internal use software are subject to capitalization during the application development stage, beginning when a project, that will result in additional functionality, is approved and ending when the software is put into productive use. Capitalized internal use software costs are amortized on a straight- line basis over the estimated life of the software, generally three to six years, commencing when the respective software is put into productive use.

Amortization related to capitalized software development costs totaled $7.1 million, $5.1 million, and $5.5 million, for the fiscal years ended October 31, 2017, 2016, and 2015, respectively. Unamortized capitalized software development costs totaled $50.7 million and $55.1 million as of October 31, 2017 and 2016, respectively, and are recorded as a component of Other long-term assets in our Consolidated Balance Sheets.

Restructuring The determination of when we accrue for employee involuntary termination benefits depends on whether the termination benefits are provided under a one-time benefit arrangement or under an on-going benefit arrangement. We record charges for one-time benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations and charges for on-going benefit arrangements in accordance with ASC 712 Nonretirement Postemployment Benefits.

We recognize a liability for costs associated with the closure of facilities when the liability is incurred. We measure these liabilities at fair value. Costs to terminate a contract before the end of its term are recognized when we terminate the contract in accordance with the contract terms. Costs that will continue to be incurred under a contract for its remaining term without economic benefit, net of estimated sublease income, are recognized at the facility cease-use date.

Income Taxes Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities, and their reported amounts using enacted tax rates in effect for the year the differences are expected to reverse. In evaluating our ability to recover our deferred tax assets management considers all available positive and negative evidence including the past operating results, the existence of cumulative losses in past fiscal years, and the forecasted future taxable income in the jurisdictions in which we have operations.

We have established valuation allowances on U.S. deferred tax assets and certain non-U.S. deferred tax assets because realization of these tax benefits through future taxable income is not more likely than not as of

2017 10-K 81 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

October 31, 2017 and 2016. We intend to maintain the valuation allowances until sufficient positive evidence exists to support the reversal of the valuation allowances. We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from the estimates, the amount of the valuation allowance could be materially impacted. An increase in the valuation allowance would result in additional tax expense in such period.

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as the interest and penalties relating to these uncertain tax positions. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws. Our estimate for the potential outcome of any uncertain tax issue is based on detailed facts and circumstances of each issue. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial condition.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period.

Cash and Cash Equivalents Cash and cash equivalents consist of cash, money market funds, and time deposits with maturities of three months or less when purchased.

Allowance for doubtful accounts An allowance for doubtful accounts is established with respect to those amounts that we determine to be doubtful of collection using specific identification of doubtful accounts and an aging of receivables analysis based on invoice due dates. Actual collection losses may differ materially from management’s estimates. Uncollectible receivables are written off against the allowance for doubtful accounts when all efforts to collect them have been exhausted. Accounts receivable payment terms are generally between net 30 to 60 days, unless special payment terms are arranged.

Inventories Inventories are stated at the lower of standard cost and net realizable value. We compute inventory cost using standard costs, primarily on a FIFO method. Standard costs approximate actual costs, including materials, manufacturing costs, in-bound freight costs, and inbound-related supply chain costs. We regularly monitor inventory quantities on hand and committed orders with contract manufacturers, and record write-downs for excess and obsolete inventories based primarily on the shipment history and our estimated forecast of product demand. Such write-downs establish a new cost basis of accounting for the related inventory.

Consigned inventories from our contract manufacturers where title has not been transferred to us are excluded from our inventories. In certain circumstances, we are obligated to prepay deposits to our contract

82 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) manufacturers based on a percentage of the value of the inventories consigned to us, and after a certain period of time has elapsed, we may be required to prepay the full amount if we have not taken title to the inventory. Prepayments for consigned inventory are included in Prepaid expenses and other current assets in our Consolidated Balance Sheets.

Generally, we take title to consigned inventories when we ship to our customers, and record the full cost of the inventories as Cost of net revenues at that time. We must purchase the consigned inventories from our contract manufacturers after a certain agreed-upon period of time, ranging from 30 days to one year. Consigned inventories are included in our calculation of minimum order commitments from our contract manufacturers.

Fair Value Measurements We measure and record certain of our financial assets and liabilities at fair value on a recurring basis. We also apply the provisions of fair value measurement to various non-recurring measurements for our financial and non-financial assets and liabilities.

We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When estimating fair value, we consider the principal or most advantageous market in which we would transact, and we consider assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, credit risk, and risk of non-performance.

In measuring fair value, we follow a three-level hierarchy based on the inputs used: Level 1 — Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 — Other inputs that are directly or indirectly observable in the marketplace, such as similar instruments in an active market, or computations using, among other inputs, forward pricing curves, credit default spreads, or the Black- Scholes-Merton valuation model. Level 3 — Unobservable inputs that are supported by little or no market activity.

Equity Investments We evaluate our equity investments to determine whether an investee is a variable interest entity. If we conclude that an investee is a variable interest entity, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a variable interest entity, we consolidate such entity and reflect the noncontrolling interest of other beneficiaries of that entity. If we conclude that an investee is not a variable interest entity, we do not consolidate the investee and account for the investment under either the equity method or cost method.

We periodically reassess whether we are the primary beneficiary of a VIE. The reassessment process considers whether we have acquired the power to direct the most significant activities of the VIE through changes in governing documents or other circumstances. We also reconsider whether entities previously determined not to be VIEs have become VIEs, and vice versa, based on changes in facts and circumstances including changes in contractual arrangements and capital structure.

Equity investments are accounted for under the equity method if we are able to exert significant influence over the investee but do not have a controlling financial interest. If we do not have significant influence over the investee, we account for it under the cost method. The carrying value of equity investments are included in Other long-term assets in our Consolidated Balance Sheets.

Equity method investments are initially recorded at fair value and are adjusted for our proportionate share of the earnings and losses of the equity method investee. Earnings and losses of equity method investments are based on the most recently available financial statements of the investee and are included in Other income

2017 10-K 83 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(expense), net in our Consolidated Statements of Operations. Basis differences between the cost of an equity method investment and the underlying equity in the long-lived assets are amortized over the estimated economic useful life of the underlying long-lived asset and the amortization expense is included in Other income (expense), net in our Consolidated Statement of Operations.

We periodically review our cost and equity method investments for impairment and record a reduction in the carrying value, if and when necessary.

Derivative Financial Instruments We use derivative financial instruments to manage certain exposures to foreign currency exchange rate and interest rate risks. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates and interest rates.

We do not use derivative financial instruments for speculative or trading purposes, nor do we hold or issue leveraged derivative financial instruments. Our derivative financial instruments do not include a right of offset, and we do not offset derivative financial assets against derivative financial liabilities.

Our derivative financial instruments consist primarily of foreign exchange forward contracts, which we use to hedge certain existing and anticipated foreign currency denominated transactions, and interest rate swaps, which we use to hedge a portion of the variability in cash flows related to our interest payments. We recognize the estimated fair value of our outstanding derivative financial instruments on our Consolidated Balance Sheets at the end of each reporting period as either assets or liabilities. Foreign exchange forward contracts generally mature within 90 days of inception. The interest rate swaps will mature on June 30, 2019.

Gains and losses arising from derivative financial instruments that are designated as cash flow hedges are recorded in Accumulated other comprehensive loss, and are subsequently reclassified into earnings in the period or periods during which the underlying transactions affect earnings. When we enter into hedges we formally assess hedge effectiveness and monitor the effectiveness qualitatively on an ongoing basis. When an anticipated transaction is no longer likely to occur, the corresponding derivative instrument is ineffective as a hedge, and changes in fair value of the instrument are recognized in Other income (expense), net.

Derivative financial instruments that are not designated as hedging instruments predominantly consist of foreign exchange forward contracts used to hedge foreign currency-denominated inter-company receivables and payables exposures arising from product sales and loans from one of our entities to another. Gains and losses arising from changes in the fair values of derivative financial instruments that are not designated as hedging instruments are recognized in Other income (expense), net.

Long-Lived Assets Fixed assets are stated at cost, net of accumulated depreciation and amortization. Fixed assets are depreciated on a straight-line basis over the estimated useful lives of the assets, generally ranging from three to ten years, except buildings which are depreciated from 40 to 50 years. Leasehold improvements are depreciated over the lesser of the lease term or the estimated useful life of the asset.

Revenue generating assets are comprised of tangible assets that we have placed at third party locations for the purpose of generating revenues under rental or service based arrangements. Revenue generating assets are stated at cost, net of accumulated depreciation, and are generally depreciated on a straight-line basis over the estimated useful lives of the assets, generally five years. Payments to acquire revenue generating assets are included in Capital expenditures within cash flows from investing activities on our Consolidated Statements of Cash Flows.

Equipment under capital leases is recorded at the lesser of the present value of the minimum lease payments at the beginning of the lease term or the fair value of such equipment. Leased equipment is amortized on a straight-line basis over the shorter of the lease term or the estimated useful life of such equipment.

84 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Purchased intangible assets that have finite useful lives are amortized on a straight-line basis over their estimated period of benefit, generally ranging from one to 20 years.

If the estimated period of benefit for any of our long-lived assets is determined to have changed, we amortize the remaining net book values over the revised period of benefit.

We periodically evaluate whether changes have occurred that would render our long-lived assets not recoverable. If such circumstances arise, we use an estimate of the undiscounted value of expected future operating cash flows to determine whether the long-lived assets are impaired. If the aggregate undiscounted cash flows are less than the carrying amount of the assets, the resulting impairment charge to be recorded is calculated based on the excess of the carrying amount of the assets over the fair value of such assets, with the fair value generally determined based on an estimate of discounted future cash flows. For assets held for sale, to the extent the carrying value is greater than the asset’s fair value less costs to sell, an impairment loss is recognized for the difference.

Goodwill Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired and liabilities assumed in a business acquisition. Goodwill is not amortized for accounting purposes.

We review the goodwill allocated to each of our reporting units for possible impairment annually on August 1 and whenever events or changes in circumstances indicate its carrying amount may not be recoverable. When assessing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform a quantitative impairment test. If, we conclude otherwise, then no further action is taken. In a quantitative impairment test, we measure the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit, and record an impairment charge for any excess.

In assessing the qualitative factors, we assess relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry, and market considerations, cost factors, overall financial performance, Verifone-specific events, and share price trends, and making the assessment as to whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact.

The carrying amount of each reporting unit is determined based upon the assignment of our assets and liabilities, including existing goodwill and other intangible assets, to the identified reporting units. Where an acquisition benefits only one reporting unit, we allocate, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. Where we have had an acquisition that benefited more than one reporting unit, we have assigned the goodwill to our reporting units as of the acquisition date such that the goodwill assigned to a reporting unit is the excess of the fair value of the acquired business, or portion thereof, to be included in that reporting unit over the fair value of the individual assets acquired and liabilities assumed that are assigned to the reporting unit.

The estimated fair value of the reporting units is determined using the income approach. The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost savings, tax deductions, and proceeds from disposition. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of

2017 10-K 85 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) inflation, and risks associated with the particular investment. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows.

In order to assess the reasonableness of the calculated fair values of its reporting units, we compare the sum of the reporting units’ fair values to our market capitalization and calculate an implied control premium (the excess of the sum of the reporting units’ fair values over the market capitalization). We evaluate the reasonableness of the premium over market capitalization by first quantifying certain controlling market participants’ synergies included in the income approach. We then supplement this step by comparing the implied premiums for each reporting unit to the premiums implied by recent comparable transactions. If the implied control premium is not reasonable in light of these recent transactions, we will reevaluate our fair value estimates of the reporting units by adjusting the discount rates or other assumptions.

In the event that we realign our reporting units, we allocate our goodwill to the new reporting units using the relative fair value approach. We perform an assessment of any potential goodwill impairment immediately prior to and after the reallocation of goodwill to the new reporting units.

Debt Issuance Costs and Original Issue Discounts Costs incurred in connection with the issuance of new debt are generally capitalized and amounts paid in connection with the modification of existing debt are generally expensed as incurred. Capitalizable debt issuance costs paid to third parties and original issue discounts paid to creditors, net of amortization, are offset against the associated Short-term and Long-term debt on our Consolidated Balance Sheets.

Amortization expense on capitalized debt issuance costs and original issue discounts related to loans with fixed payment terms is calculated using the effective interest method over the term of the associated loans. Amortization expense on capitalized debt issuance costs and original issue discounts related to revolving loans are calculated using the straight-line method over the term of the revolving loan commitment. Amortization expense is recorded in Interest expense, net in our Consolidated Statements of Operations. When debt is extinguished prior to the maturity date, any remaining associated debt issuance costs or original issue discounts are expensed to Interest expense, net in our Consolidated Statements of Operations.

Business Combinations In a business combination, we recognize separately from goodwill the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject to adjustment. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill in the period in which the adjustment amounts are determined.

For a given acquisition, we generally identify certain pre-acquisition contingencies as of the acquisition date, and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the purchase price allocation and, if so, to determine the estimated amounts.

If we determine that a pre-acquisition non-income tax related contingency is probable in nature and estimable as of the acquisition date, we record our best estimate for such contingency as a part of the preliminary purchase price allocation. We often continue to gather related information and evaluate our pre-acquisition contingencies throughout the measurement period and if we make changes to the amounts recorded or if we identify additional pre-acquisition contingencies during the measurement period, such amounts are recorded in the period in which

86 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) they are identified. Subsequent to our final determination of the contingency’s estimated value within the measurement period, changes to these contingencies could have a material impact on our results of operations and financial position.

In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly with any adjustments to our preliminary estimates being recorded to goodwill provided that we are within the measurement period, and we continue to collect information in order to determine their estimated values. Subsequent to the measurement period or our final determination of the tax allowance’s estimated value, changes to these uncertain tax positions and tax-related valuation allowances will affect our Income tax provision (benefit) in our Consolidated Statements of Operations and could have a material impact on our results of operations and financial position.

Acquisition-related costs are expensed as incurred.

Redeemable Noncontrolling Interest in Subsidiary The redeemable noncontrolling interest in subsidiary is recognized at the greater of the initial carrying amount increased or decreased for the noncontrolling interest’s share of net income or loss, or its redemption value.

Concentrations of Credit Risk Cash is placed on deposit in major financial institutions around the world. Some of these deposits may be in excess of insured limits. We believe that the financial institutions that hold our cash are financially sound and, accordingly, minimal credit risk exists with respect to these balances.

We invest cash not required for use in operations in high credit quality securities based on our investment policy. The investment policy has limits based on credit quality, investment concentration, investment type, and maturity that we believe reduce the risk of loss. Investments are of a short-term nature and include investments in money market funds and time deposits.

Our derivative financial instruments expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement when we have an unrealized gain on the instrument. We believe the counterparties for our outstanding contracts are large, financially sound institutions, and thus we do not anticipate nonperformance by these counterparties. However, given the high debt levels of many countries and institutions worldwide, the failure of the counterparties is possible. We have not experienced any investment losses due to institutional failure or bankruptcy.

Our accounts receivable are derived from sales to a large number of direct customers, resellers, and distributors globally. We perform ongoing evaluations of our customers’ financial condition and limit the amount of credit extended when deemed necessary, but generally require no collateral. As of October 31, 2017 and 2016 no single customer accounted for more than 10% of our total Accounts receivable, net. For fiscal years 2017, 2016, and 2015 no single customer accounted for more than 10% of our total Net revenues.

We utilize a limited number of third parties to manufacture our products, and rely upon these contract manufacturers to produce and deliver products on a timely basis and at an acceptable cost. Furthermore, a majority of our manufacturing activities are concentrated in China and Brazil. As a result, disruptions to the business or operations of the contract manufacturers or to their ability to produce the required products in a timely manner, and particularly disruptions to the manufacturing facilities located in China and Brazil, could significantly impact our business and operations. In addition, a number of components that are necessary to manufacture and assemble our systems are specifically customized for use in our products and are obtained from sole source suppliers on a purchase order basis. Because of the customized nature of these components and the limited number of available suppliers, if we were to experience a supply disruption, it would be difficult and costly to find alternative sources in a timely manner.

2017 10-K 87 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Recently Adopted Accounting Pronouncements During August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. Because the presentation and classification under this new standard is consistent with our historical presentation and classification, we elected to early adopt ASU 2016-15 retrospectively, effective November 1, 2016. Adoption had no impact on our consolidated statements of cash flows in any period presented.

During November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash, which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We have elected to early adopt ASU 2016-18 retrospectively, effective November 1, 2016. Accordingly, restricted cash is included as a component of Cash, cash equivalents and restricted cash on our Consolidated Statements of Cash Flows for all periods presented.

During January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The standard is effective for annual or any interim impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Because this new standard simplifies the goodwill impairment test, we elected to early adopt ASU 2017-04 prospectively, effective February 1, 2017, when we performed an interim impairment test on our former Taxi Solutions reporting unit. The adoption of this standard did not have any impact on our consolidated financial position and results of operations.

During May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation - Scope of Modification Accounting, which provides guidance that clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The amendments in this standard should be applied prospectively to awards modified on or after the adoption date. Because this new standard simplifies the assessment of any share-based payment award modifications, we have elected to early adopt ASU 2017-09 prospectively, effective August 1, 2017. The impact of the adoption of this standard will depend upon the nature of future modifications to share-based payment awards.

During August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted in any interim period after issuance, provided that the effect of adoption should be reflected as of the beginning of the fiscal year of adoption. Because this new standard simplifies our hedge accounting, we have elected to early adopt ASU 2017-12 using a modified retrospective approach effective as of November 1, 2016. Adoption of this standard did not have any impact on our consolidated financial position and results of operations.

Recent Accounting Pronouncements Not Yet Adopted During May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as amended by ASU 2015-14, 2016-08, 2016-10, 2016-12, 2017-05, and 2017-13 which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue as control of goods or services transfers to a customer at an amount that reflects

88 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) the expected consideration to be received in exchange for those goods or services. It defines a five step approach for recognizing revenue, which may require a company to use more judgment and make more estimates than under the current guidance. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted as of reporting periods beginning after December 15, 2016. Two methods of adoption are permitted: (a) full retrospective adoption, meaning this standard is applied to all periods presented or (b) modified retrospective adoption, meaning the cumulative effect of applying the new guidance as of the date of adoption is recognized as an adjustment to the opening retained earnings balance. We expect to adopt ASU 2014-09 effective in the first interim period of our fiscal year ending October 31, 2019 and currently expect to select the modified retrospective adoption method.

As this new revenue standard will supersede substantially all existing revenue guidance under US GAAP, once adopted it could impact revenue and cost recognition on sales across all our businesses, in addition to our business processes, compensation, information technology systems and other financial reporting and operational elements. We expect that this standard may impact, in some cases, the timing and amount of revenue recognized, such as term based software licenses, which are not material, but that are currently recognized over the license term and will be recognized at the time the license is delivered to the customer under the new guidance. Additionally, the direct costs to obtain and fulfill customer contracts, in some cases, may be deferred and amortized under the new standard. We are continuing to assess the potentially impacted revenue streams and costs, quantifying the materiality of these impacts and considering additional disclosure requirements.

During February 2016, the FASB issued ASU 2016-02, Leases, which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In connection with this new guidance, the FASB created Topic 842, Leases, which supersedes Topic 840, Leases. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are continuing to evaluate our adoption timing and the impact of this new pronouncement on our consolidated financial position and results of operations. We expect that this new standard will have a material impact on our balance sheets and are in the process of evaluating whether adoption may impact the timing of revenue recognition on certain leases of equipment to customers.

During March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any interim or annual period, however, any adjustments should be reflected as of the beginning of the fiscal year of adoption and all of the guidance must be adopted in the same period. The new standard must be adopted either prospectively, retrospectively, or using a modified retrospective transition method, depending on the area covered in this ASU. We intend to adopt this standard, as required, effective November 1, 2017 and do not expect adoption to have a material impact on our consolidated financial position, and results of operations.

During June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which introduces new guidance for the accounting for credit losses on financial instruments and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The new standard must generally be adopted using a modified retrospective transition method, through a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. We are currently in the process of evaluating the impact of this new pronouncement on our consolidated financial position and results of operations and our adoption timing.

During January 2017, the FASB issued ASU 2017-01, Business Combinations - Clarifying the Definition of a Business, which provides new guidance to assist entities with evaluating when a set of transferred assets and

2017 10-K 89 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) activities is a business. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. This update should be applied prospectively on or after the effective date. Early application is permitted in certain circumstances. We are currently assessing when to adopt this new standard. The impact of adopting this standard will depend upon the nature of our future acquisitions, if any.

Note 2. Business Combinations Fiscal year 2017 Divestiture On June 30, 2017, we divested our controlling interest in Verifone Systems (China), Inc., the entity which operated our China business, to the former general manager of this business. In connection with this divestiture, we retained a 30% equity interest in Verifone Systems (China), Inc., in the form of non-voting preferred equity that has a $29 million liquidation preference and is non-convertible for an initial two year period. We have determined that Verifone Systems (China), Inc. is a variable interest entity and that we are not the primary beneficiary. Additionally, we do not have significant influence over the entity, so we account for this investment as a cost method investment. The initial fair value of our 30% equity interest was determined using the income approach and was deemed nominal. The income approach, which we believe most appropriately measures the fair value of this income producing asset, calculates fair value by discounting estimated after-tax cash flows to a present value, using a risk-adjusted discount rate. Our investment is classified as Level 3 because we use significant unobservable inputs to determine the expected cash flows and an appropriate discount rate to calculate the fair value. The significant unobservable inputs we use to value this investment include our estimate of the future expected revenues, margins and other cash outlays, as well as expected terminal value growth rates of the China business. See Note 9, Equity Investments, and Note 12, Restructuring and Related Charges, for additional information.

Fiscal year 2017 Exchange Transaction On April 7, 2017, we entered into an exchange transaction with DMI Parent, DMI Holdings and Gas Media under which we contributed certain assets, consisting of customer contracts associated with our business of marketing, promoting, selling and distributing media and advertising solutions for display or use in petroleum forecourts in the United States, in exchange for a 50% equity interest in Gas Media, and DMI Parent contributed 100% of its equity interest in DMI Holdings in exchange for a 50% equity interest in Gas Media. Gas Media will be operated by DMI Parent and Verifone, but is not jointly controlled by both parties. In connection with the exchange transaction, we have agreed to guarantee, in certain circumstances, up to $12.5 million out of a total of $83.8 million of debt issued to Gas Media.

Our investment in Gas Media was initially valued at $19.2 million. We have determined that Gas Media is not a variable interest entity and we account for this investment as an equity method investment as we have significant influence over the entity. The debt guarantee was deemed to have a nominal value. We have used the income approach to determine the fair value of our investment in Gas Media. The income approach, which we believe most appropriately measures the fair value of this income producing asset, calculates fair value by discounting estimated after-tax cash flows to a present value, using a risk-adjusted discount rate. Our investment is classified as Level 3 because we use significant unobservable inputs to determine the expected cash flows and an appropriate discount rate to calculate the fair value. The significant unobservable inputs we use to value the Gas Media investment include our estimate of the future expected revenues, margins and other cash outlays, as well as the terminal value growth rates of the Gas Media business. The discount rate used to determine the fair value of this investment is 18.7%. See Note 9, Equity Investments, for additional information.

In connection with this exchange transaction, we recorded a $10.1 million gain that is included in Other income (expense), net in the Consolidated Statements of Operations. The gain was determined as the excess of the fair value of Verifone’s 50% equity interest in Gas Media over the carrying value of the contributed assets, including allocated goodwill.

90 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fiscal Year 2016 Acquisitions During fiscal year 2016, we completed three business combinations with net assets as described in the table below for an aggregate consideration totaling $193.1 million, including $186.8 million of cash paid on acquisition date, contingent consideration with a fair value of $5.0 million at the acquisition date and $1.3 million in future consideration based on the exchange rate at the acquisition date. No Verifone equity was issued, and in each transaction all the outstanding equity of the applicable business was acquired, except for Panaroma Bilisim Teknolojileri Sanayi Ve Ticaret Anonim Sirketi (Panaroma), in which we acquired 51% of the voting equity interest. See Note 9, Equity Investments, for additional information about our investment in Panaroma. We acquired these businesses to expand our operations in Germany, North America, and Turkey. Each acquisition was accounted for using the acquisition method of accounting.

The following table summarizes the fair values of the assets acquired and liabilities assumed (in thousands) at the acquisition date of each transaction:

InterCard AJB Panaroma December 23, February 2, May 20, Acquisition date 2015 2016 2016 Total Tangible assets acquired (liabilities assumed), net (1) ...... $ 3,874 $16,811 $ (2,479) $ 18,206 Purchased intangible assets (2) ...... 52,681 41,100 14,220 108,001 Redeemable noncontrolling interest (3) ...... — — (7,430) (7,430) Goodwill (4) ...... 37,292 30,989 6,090 74,371 Total purchase price ...... $93,847 $88,900 $10,401 $193,148

(1) The net assets acquired include trade receivables valued at $23.5 million. The gross contractual value of the trade receivables as of the acquisition date was $31.5 million, of which $8.0 million was not expected to be collected. (2) Purchased intangible assets include customer relationships valued at $76.9 million, which are amortized over their estimated useful lives of one to thirteen years, acquired technology valued at $21.0 million, which are amortized over their estimated useful lives of four to six years, and other intangibles valued at $10.1 million, which are amortized over their estimated useful lives of one to seven years. (3) The minority shareholder holding the remaining 49% of Panaroma has a put option that is exercisable for three years after January 1, 2020 and if exercised requires us to purchase the remaining 49% equity of Panaroma at a multiple of earnings before taxes, depreciation and amortization for the year ended December 31, 2019. Since the noncontrolling interest is redeemable at the option of the minority shareholder and is outside our control, it is reported in the mezzanine section in the Consolidated Balance Sheets and recognized at the greater of the initial carrying amount increased or decreased for the noncontrolling interest’s share of net income or loss, or its redemption value. (4) Goodwill represents the expected benefits of combining the acquisitions’ operations with our operations. Goodwill from the InterCard and AJB acquisitions was assigned to our Verifone Services reportable segment. The goodwill of the Panaroma acquisition was assigned to our Verifone Systems reportable segment. The goodwill associated with the AJB acquisition that is deductible for income tax purposes is $19.3 million and goodwill recognized on the other fiscal year 2016 acquisitions is not deductible for income tax purposes.

Fiscal Year 2015 Acquisitions In fiscal year 2015, we completed five business combinations for consideration totaling $29.6 million, including $22.1 million of cash paid on acquisition date, $5.7 million in future consideration and contingent consideration with a fair value of $1.8 million at the acquisition dates. Each acquisition was accounted for using the acquisition method of accounting. These acquisitions were completed to augment our existing service offerings. Purchased intangible assets totaled $9.0 million related to developed and core technology, $2.8 million related to customer relationships, and $0.5 million related to other intangible assets. Goodwill from these acquisitions totaled $16.6 million, of which $5.1 million was deductible for income tax purposes. The goodwill was substantially assigned to our North America reportable segment in fiscal year 2015. In fiscal year 2016, in

2017 10-K 91 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) conjunction with the realignment of the company’s organizational structure, we reallocated our goodwill to our two new operating segments: Verifone Systems and Verifone Services that are also our reporting units.

See Note 10, Goodwill and Purchased Intangible Assets for additional information.

Note 3. Net Income (Loss) per Share of Common Stock Basic net income (loss) per share of common stock is computed by dividing net income (loss) attributable to VeriFone Systems, Inc. stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per share of common stock is computed using the weighted average number of shares of common stock outstanding plus the effect of common stock equivalents, unless the common stock equivalents are anti-dilutive. The potential dilutive shares of our common stock resulting from assumed exercises of equity related instruments are determined using the treasury stock method. Under the treasury stock method, an increase in the fair market value of our common stock will result in a greater number of dilutive securities.

The following table presents the computation of net income (loss) per share of common stock (in thousands, except per share data):

Years Ended October 31, 2017 2016 2015 Basic and diluted net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Numerator: Net income (loss) attributable to VeriFone Systems, Inc. stockholders ...... $(173,829) (9,281) $ 79,097 Denominator: Weighted average shares attributable to VeriFone Systems, Inc. stockholders—basic ...... 111,817 110,829 114,044 Weighted average effect of dilutive stock options, RSUs and RSAs ...... — — 1,890 Weighted average shares attributable to VeriFone Systems, Inc. stockholders—diluted ...... 111,817 110,829 115,934 Net income (loss) per share attributable to VeriFone Systems, Inc. stockholders: Basic ...... $ (1.55) $ (0.08) $ 0.69 Diluted ...... $ (1.55) $ (0.08) $ 0.68

For the fiscal years ended October 31, 2017 and 2016, equity incentive awards representing 6.4 million and 6.2 million shares of common stock, respectively, were excluded from the calculation of weighted average shares for diluted net loss per share as they were anti-dilutive because we incurred net losses for those periods. For the fiscal year ended October 31, 2015, equity incentive awards representing 1.5 million shares of common stock were excluded from the calculation of weighted average shares for diluted net income per share as they were anti-dilutive. Anti-dilutive awards, which include stock options, RSUs and RSAs, could impact future calculations of diluted net income per share if the fair market value of our common stock increases.

Note 4. Employee Benefit Plans Retirement and Post-employment Plans We maintain defined contribution retirement plans in certain countries, including a 401(k) plan for our U.S. employees. During fiscal years 2017, 2016, and 2015, we contributed $13.9 million, $16.4 million, and $13.9 million, respectively, to these plans.

92 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We have defined benefit pension plans, as required by local laws, for our employees in certain countries, primarily Germany and Taiwan, and non-retirement post-employment benefit plans for our employees in certain countries, primarily Germany and Israel. These plans are not considered material to our financial position or results of operations.

Equity Incentive Plans We have granted stock awards, including stock options and restricted stock units (RSUs) pursuant to stockholder-approved equity incentive plans. Our stock awards include vesting provisions that are based on either time, performance or market conditions. Shares issued to employees upon the exercise or vesting of equity incentive awards are issued from authorized but unissued common stock.

2006 Equity Incentive Plan In March 2006, our stockholders approved the 2006 Equity Incentive Plan for our officers, directors, employees, and consultants. Under this equity incentive plan, we have granted stock options, RSUs, and RSAs. Stock option awards are granted with an exercise price equal to the market price of our common stock at the date of grant, and have a maximum term of seven years. Awards under this plan are generally time-based awards with vesting over a period of 1 to 4 years from the date of grant, or performance-based awards with vesting based on achievement of specified criteria over a period of 1 to 3 years from the date of grant. The vesting conditions of all awards were set by the compensation committee of the Board of Directors at the time of the grant.

As of October 31, 2017, 13.0 million shares remained available for future grants under this plan. For purposes of the number of shares issuable under this plan, any awards granted as stock options are counted as one share for every award granted; RSUs granted on or after June 29, 2011 are counted as 2.0 shares for every RSU granted; and RSUs granted prior to June 29, 2011 are counted as 1.75 shares for every RSU granted.

Other Equity Incentive Plans Stock options remain outstanding under several other equity incentive plans, including plans assumed in connection with our acquisitions of Hypercom and Lipman. We no longer grant stock options under any of these plans.

Equity Incentive Plan Activity The following table provides a summary of stock option activity for the fiscal year ended October 31, 2017:

Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (in thousands) (per share) (Years) (in thousands) Outstanding at beginning of period ...... 2,859 $30.16 Exercised ...... (72) $15.98 Canceled ...... (1) $20.57 Expired ...... (735) $28.05 Outstanding at end of period ...... 2,051 $31.41 1.77 $527 Vested or expected to vest at October 31, 2017 ...... 2,050 $31.42 1.77 $527 Exercisable at October 31, 2017 ...... 2,025 $31.49 1.76 $527

The weighted-average grant-date fair value per share for stock options granted during the fiscal year ended October 31, 2015 was $13.44. The total intrinsic value of options exercised during the fiscal years ended October 31, 2017, 2016, and 2015 was $0.1 million, $5.8 million, and $14.5 million, respectively. We did not grant stock options in the fiscal years ended October 31, 2017 and October 31, 2016.

2017 10-K 93 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table provides a summary of RSU activity for the fiscal year ended October 31, 2017 (in thousands):

Aggregate Number Intrinsic of Shares Value Outstanding at beginning of period ...... 3,378 Granted ...... 2,983 Vested ...... (1,127) Canceled ...... (866) Outstanding at end of period ...... 4,368 $83,340 Vested or expected to vest at October 31, 2017 ...... 3,763 $71,794 Vested and deferred at October 31, 2017 ...... 91 $ 1,729

During the fiscal year ended October 31, 2017 we granted 2.5 million RSUs with time-based vesting conditions and 0.5 million RSUs with performance-based vesting conditions contingent upon meeting certain financial and operational targets.

The weighted-average grant-date fair value per share for RSUs granted during the years ended October 31, 2017, 2016, and 2015 was $18.13, $24.06, and $36.14, respectively.

The total fair value of RSUs that vested during the fiscal years ended October 31, 2017, 2016, and 2015 was $20.8 million, $23.3 million, and $39.6 million, respectively.

Equity Incentive Award Valuation The grant date fair value of RSUs that have time or performance based vesting conditions contingent upon meeting financial and operational targets are equal to the closing market price of our common stock on the grant date.

We estimate the grant date fair value of RSUs that have market based vesting conditions using the Monte Carlo simulation method, using the following weighted-average assumptions:

Years Ended October 31, 2017 2016 2015 Expected term (in years) ...... 3.0 3.0 3.0 Risk-free interest rate ...... 1.5% 1.3% 1.1% Expected dividend rate ...... 0.0% 0.0% 0.0% Expected stock price volatility ...... 36.9% 46.8% 52.7%

Stock-Based Compensation Expense The following table presents the stock-based compensation expense recognized in our Consolidated Statements of Operations (in thousands):

Years Ended October 31, 2017 2016 2015 Cost of net revenues ...... $ 4,627 $ 3,324 $ 2,548 Research and development ...... 6,482 7,207 6,669 Sales and marketing ...... 11,538 13,503 16,219 General and administrative ...... 17,256 18,244 16,817 Total stock-based compensation expense ...... $39,903 $42,278 $42,253

94 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Our computation of stock-based compensation expense includes an estimate of award forfeitures based on historical experience. We record compensation expense only for those awards that are expected to vest.

As of October 31, 2017, total unrecognized stock-based compensation expense related to unvested RSUs was $60.2 million and is expected to be recognized over the remaining weighted-average vesting period of 2.5 years. As of October 31, 2017, total unrecognized stock-based compensation expense related to unvested options was nominal and is expected to be recognized in the next eight months.

Note 5. Stock Repurchase Program In September 2015, our Board of Directors authorized a program to repurchase shares of our common stock with an aggregate value of up to $200.0 million, with no expiration from the date of authorization. As of October 31, 2017, there was $50.0 million remaining available for stock repurchases under this program. Shares may be repurchased from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise. Certain of our share repurchases have been and may from time to time be effected through Exchange Act Rule 10b5-1 repurchase plans. The timing and actual amount of the share repurchases will depend on several factors including price, capital availability, regulatory requirements, alternative investment opportunities, including mergers and acquisitions, market conditions and other factors. We are not obligated to repurchase any specific number of shares under the program and the repurchase program may be modified, suspended or discontinued at any time.

During the fiscal years ended October 31, 2016 and 2015, we repurchased approximately 2.6 million and 2.7 million shares of our common stock, respectively, on the open market at an average repurchase price of $28.02 and $28.66 per share, respectively, pursuant to this program. No shares were repurchased during the fiscal year ended October 31, 2017.

In December 2017, our Board of Directors authorized to expand the stock repurchase program to allow repurchase of additional shares of our common stock with an aggregate value of up to $100.0 million, with no expiration from the date of authorization. As of December 18, 2017, there was $150.0 million remaining available for stock repurchases under this program.

Note 6. Income Taxes Income (loss) before income taxes consisted of the following (in thousands):

Years Ended October 31, 2017 2016 2015 United States ...... $(173,550) $(2,894) $69,458 Foreign ...... 30,731 4,721 3,490 Income (loss) before income taxes ...... (142,819) 1,827 72,948

2017 10-K 95 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The provision for (benefit from) income taxes consisted of the following (in thousands):

Years Ended October 31, 2017 2016 2015 Current: Federal ...... $ 915 $ (917) $ 1,965 State ...... (130) 961 206 Foreign ...... 35,490 26,093 21,664 Total current provision for income taxes ...... 36,275 26,137 23,835 Deferred: Federal ...... (1,100) 3,377 (306) State ...... (70) 336 (44) Foreign ...... (2,605) (18,323) (30,894) Total deferred benefit from income taxes ...... (3,775) (14,610) (31,244) Income tax provision (benefit) ...... $32,500 $ 11,527 $ (7,409)

A reconciliation of taxes computed at the federal statutory income tax rate to the provision for (benefit from) income taxes is as follows (in thousands):

Years Ended October 31, 2017 2016 2015 Provision for (benefit from) income taxes computed at the federal statutory rate ...... $(49,986) $ 638 $ 25,532 State income tax, net of federal tax benefit ...... (154) 961 469 Foreign income taxes at other than U.S. rates ...... 17,508 17,155 (2,544) Valuation allowance, net ...... 58,988 (1,919) (31,065) Impact of tax rate changes ...... (474) (1,523) 485 Unrealized inter-company profits ...... 114 (130) 409 Foreign exchange ...... 3,156 1,067 (2,692) Stock compensation ...... 288 918 1,516 Research Credit ...... (2,002) (2,926) (1,662) Other ...... 5,062 (2,714) 2,143 Income tax provision (benefit) ...... $32,500 $11,527 $ (7,409)

96 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of our deferred tax assets and liabilities were as follows (in thousands): October 31, 2017 2016 Deferred tax assets: Loss carry forwards ...... $154,890 $ 111,955 Basis differences in deductible goodwill and purchased intangibles ...... 54,722 49,807 Foreign tax credit carry forwards ...... 19,048 14,544 Foreign taxes on basis differences ...... 58,924 54,170 Accrued expenses and reserves ...... 20,515 29,609 Deferred revenue ...... 40,073 55,657 Stock based compensation ...... 20,927 19,965 Unrealized foreign currency losses ...... 15,344 17,144 R&D credit carry forwards ...... 13,108 10,712 Interest carry forward ...... 12,423 11,221 Inventories ...... 10,692 7,637 Other deferred tax assets ...... 9,452 6,895 Total deferred tax assets ...... 430,118 389,316 Valuation allowance ...... (372,616) (326,935) Deferred tax liabilities: Basis differences on purchased intangibles ...... (39,031) (52,827) Basis differences in investments in foreign subsidiaries ...... (70,393) (57,657) Other deferred tax liabilities ...... (12,513) (14,278) Total deferred tax liabilities ...... (121,937) (124,762) Net deferred tax liabilities ...... $ (64,435) $ (62,381)

Other deferred tax assets and liabilities are comprised primarily of the tax effects of depreciation and amortized debt issuance costs. The realization of deferred tax assets is dependent primarily on generating sufficient U.S. and foreign taxable income in future fiscal years. We regularly assess the need for a valuation allowance against deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more- likely-than-not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, we consider the cumulative loss in the U.S. as a significant piece of negative evidence. Therefore, in fiscal 2013, we established a $245.0 million valuation allowance against a significant portion of our deferred tax assets, including U.S. federal and state deferred tax assets, as well as certain other foreign deferred tax assets. We will continue to assess the realizability of the deferred tax assets in each of the applicable jurisdictions going forward and adjust the valuation allowance accordingly. We intend to maintain the valuation allowances until sufficient positive evidence exists to support the reversal of the valuation allowance. The tax loss carry forwards as of October 31, 2017 were related primarily to tax losses of $466.2 million in the U.S., $113.1 million in Ireland, $31.1 million in Brazil, $25.3 million in France, $16.3 million in Spain, $12.5 million in the United Kingdom, and $48.7 million in various other non-U.S. countries. Approximately $232.8 million of foreign tax losses may be carried forward indefinitely. The remaining approximately $480.3 million of tax losses is subject to limited carry forward terms of 3 to 20 years, and will expire at various dates beginning in 2018, if not utilized. The excess tax benefits associated with stock option exercises are recorded directly to stockholders’ equity only when realized. The excess tax benefits that have not yet been realized at October 31, 2017, but which are included in net operating loss carryforwards on a tax return basis at October 31, 2017, total $133.1 million.

2017 10-K 97 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The U.S. net operating loss carryforward includes acquired net operating losses of $125.8 million. Utilization of some of our acquired NOL and tax credit carryforwards in the United States may be subject to annual limitation due to the ownership change limitations provided by Sections 382 and 383 of the Internal Revenue Code and similar state provisions. Such an annual limitation may result in the expiration of certain NOLs and tax credits before future utilization.

As of October 31, 2017, we have recorded U.S. foreign tax credit carry forwards of $77.0 million which will expire at various dates beginning in 2020, if not utilized. In addition we have recorded U.S. research and development tax credit carry forwards of $21.4 million which will expire at various dates beginning in 2019, if not utilized.

We recognize deferred tax liabilities associated with outside basis differences on investments in foreign subsidiaries unless the difference is considered essentially permanent in duration. As of October 31, 2017, we have recorded a deferred tax liability of $64.7 million associated with $169.4 million of taxable outside basis differences which are not considered permanently reinvested. We have not recorded deferred taxes on approximately $872.9 million of undistributed earnings as they are considered permanently reinvested. As of October 31, 2017, the determination of the unrecorded deferred tax liability related to these earnings is not practicable. If circumstances change and it becomes apparent that some or all of the undistributed earnings will not be invested indefinitely, or will be remitted in the foreseeable future, an additional deferred tax liability will be recorded for some or all of the outside basis difference.

Israel Tax Audit Assessment We are currently under audit by the Israeli Tax Authorities for fiscal years 2011 through 2015. The Israeli Tax Authorities issued a tax assessment in October 2014 for fiscal year 2009 or alternatively for fiscal year 2008 claiming there was a business restructuring that resulted in a transfer of some functions, assets and risks from VeriFone Israel Ltd. to the U.S. parent company that the Israeli Tax Authorities claim was a sale valued at 1.36 billion New Israeli Shekels (approximately $386.1 million at the foreign exchange rate as of October 31, 2017). We filed our objection to the tax assessment in January 2015 and received the Israeli Tax Authorities decision through an Order (a second stage assessment) in January 2016. The Order increased the value of the sale to 2.20 billion New Israeli Shekels in fiscal year 2009 (approximately $624.1 million at the foreign exchange rate as of October 31, 2017) or alternatively 2.23 billion New Israeli Shekels in fiscal year 2008 (approximately $631.4 million at the foreign exchange rate as of October 31, 2017) and contended secondary adjustments relating to a deemed dividend and/or interest.

Based on the Order, these and other claims result in a tax liability and deficiency penalty assessment in the amount of 1.34 billion New Israeli Shekels (approximately $378.2 million at the foreign exchange rate as of October 31, 2017), if the claim was assessed for fiscal year 2009, to 1.58 billion New Israeli Shekels (approximately $446.4 million at the foreign exchange rate as of October 31, 2017) if the claim was assessed for fiscal year 2008, including interest, the required Israeli price index adjustments (referred to as the linkage differentials) and deficiency fines (as applicable) through October 31, 2017. The Israeli Tax Authorities’ contention regarding secondary adjustments relating to deemed dividend was not quantified by them.

We continue to believe the Israeli Tax Authorities’ assessment position is without merit and appealed the assessment to the district court. We have agreed with the Israeli Tax Authorities to repay our $69.0 million intercompany loan from VeriFone Israel Ltd. to the extent of the amount of a final agreed tax assessment concerning fiscal year 2008 and fiscal year 2009 or a judgment of a district court in an appeal on the decision of the Israeli Tax Authorities in the objection, if any.

The Israeli Tax Authorities issued a tax assessment in October 2017 for fiscal years 2011 and 2012 that includes secondary adjustments relating to a deemed dividend and/or interest with respect to the contention concerning business restructuring in 2008 or 2009. The Israeli Tax Authorities’ contention regarding secondary adjustments relating to deemed dividend was not quantified by them. We intend to file our objection to the assessment.

98 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other Audits We have certain other foreign subsidiaries under audit by foreign tax authorities, including Brazil for 2002, Germany for 2013 to 2015, India for fiscal years 2008 to 2015 and New Zealand for fiscal years 2014 and 2015. Although we believe we have appropriately provided for income taxes for the years subject to audit, the Brazil, Germany, India, Israel and New Zealand taxing authorities may adopt different interpretations. We have not yet received any final determinations with respect to these audits. We have accrued tax liabilities associated with these audits. With few exceptions, we are no longer subject to tax examination for periods prior to 2008.

The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands):

Years Ended October 31, 2017 2016 2015 Balance at beginning of period ...... $106,103 $110,564 $111,002 Lapse of statute of limitations ...... (6,179) (1,185) (501) Increases in balances related to tax positions taken during prior periods . . 1,946 488 2,988 Decreases in balances related to tax positions taken during prior periods ...... (1,392) (3,834) (3,615) Increases in balances related to tax positions taken during current period ...... 7,490 5,100 1,246 Settlements ...... — (5,030) (556) Balance at end of period ...... $107,968 $106,103 $110,564

The total gross unrecognized tax benefits, if recognized, will affect our effective tax rate. The amount of unrecognized tax benefits could be reduced upon closure of tax examinations or if the statute of limitations on certain tax filings expires without assessment from the tax authorities. We believe that it is reasonably possible that there could be an immaterial reduction in unrecognized tax benefits due to statute of limitation expirations in multiple tax jurisdictions during the next 12 months. Interest and penalties accrued on these uncertain tax positions will also be released upon the expiration of statutes of limitations. Interest and penalties recognized in each statement of operations were not material. As of October 31, 2017 we have accrued $6.3 million for the payment of interest and penalties related to unrecognized tax benefits.

Note 7. Balance Sheet Components Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows (in thousands):

October 31, 2017 2016 2015 Cash and cash equivalents ...... $131,029 $148,352 $208,870 Restricted cash included in Prepaid expenses and other current assets ...... 11,413 9,008 4,844 Restricted cash included in Other long-term assets ...... 1,287 1,821 2,155 Total cash, cash equivalents and restricted cash ...... $143,729 $159,181 $215,869

Restricted cash as of October 31, 2017 and 2016 was mainly comprised of cash held on behalf of customers as part of our transaction processing services.

2017 10-K 99 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Allowances for doubtful accounts Activity related to the allowances for doubtful accounts consisted of the following (in thousands):

Years Ended October 31, 2017 2016 2015 Balance at beginning of period ...... $9,240 $ 7,904 $ 8,510 Charges to bad debt expense ...... 1,037 4,251 2,329 Write-offs, recoveries, and adjustments ...... (2,377) (2,915) (2,935) Balance at end of period ...... $7,900 $ 9,240 $ 7,904

Inventories Inventories consisted of the following (in thousands):

October 31, 2017 2016 Raw materials ...... $ 32,118 $ 35,453 Work-in-process ...... 978 3,884 Finished goods ...... 93,467 135,894 Total inventories ...... $126,563 175,231

Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands):

October 31, 2017 2016 Assets held for sale ...... $ 46,368 $ 5,131 Prepaid expenses ...... 41,824 46,240 Other current assets ...... 50,204 59,026 Total prepaid expenses and other current assets ...... $138,396 $110,397

Assets held for sale relate to our Taxi Solutions business. See Note 12, Restructuring and Related Charges, for additional information. Other current assets were comprised primarily of prepaid taxes and restricted cash.

100 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property and Equipment, Net Property and equipment, net consisted of the following (in thousands):

October 31, Estimated Useful Life (Years) 2017 2016 Revenue generating assets ...... 5 $138,770 $ 209,725 Computer hardware and software ...... 3-5 97,413 112,984 Machinery and equipment ...... 3-10 47,728 57,020 Lesser of the term of the lease or the Leasehold improvements ...... estimated useful life 31,445 31,328 Office equipment, furniture, and fixtures ...... 3-5 20,947 18,573 Buildings ...... 40-50 6,028 6,011 Total depreciable property and equipment, at cost ...... 342,331 435,641 Accumulated depreciation ...... (221,574) (243,127) Depreciable property and equipment, net ...... 120,757 192,514 Construction in progress ...... 5,941 8,600 Land ...... 1,174 1,163 Total property and equipment, net ...... $127,872 $ 202,277

During the fiscal year 2017, we divested or reclassified as held for sale revenue generating assets and other fixed assets with a net carrying value of $74.9 million.

Total depreciation expense for the fiscal years ended October 31, 2017, 2016, and 2015 was $66.1 million, $62.5 million, and $58.7 million, respectively.

Other long-term assets Other long-term assets consisted of the following (in thousands):

October 31, 2017 2016 Capitalized software development costs ...... $ 50,691 $55,097 Equity investments ...... 19,589 552 Other ...... 31,526 25,674 Total other long-term assets ...... $101,806 $81,323

See Note 9, Equity Investments, for additional information on our equity investments.

Accruals and Other Current Liabilities Accruals and other current liabilities consisted of the following (in thousands):

October 31, 2017 2016 Accrued expenses ...... $ 57,114 $ 76,187 Accrued compensation ...... 65,663 52,555 Other current liabilities ...... 104,518 84,669 Total accruals and other current liabilities ...... $227,295 $213,411

2017 10-K 101 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other current liabilities were comprised primarily of trade payables and accruals that are held for sale in connection with the disposal of our Taxi Solutions business, accrued restructuring and related accruals, sales and value-added taxes payable, income taxes payable, and accrued warranty.

Accrued Warranty Activity related to accrued warranty consisted of the following (in thousands):

Years Ended October 31, 2017 2016 Balance at beginning of period ...... $16,656 $ 16,320 Warranty charged to Cost of net revenues ...... 10,466 13,111 Utilization of warranty accrual ...... (14,104) (12,957) Other ...... 469 182 Balance at end of period ...... 13,487 16,656 Less: current portion ...... (11,669) (13,640) Long-term portion ...... $ 1,818 $ 3,016

Deferred Revenue, Net Deferred revenue, net of related costs consisted of the following (in thousands):

October 31, 2017 2016 Deferred revenue ...... $181,271 $ 185,788 Deferred cost of revenue ...... $ (18,056) (14,475) Deferred revenue, net ...... 163,215 171,313 Less: current portion ...... $(101,427) (104,797) Long-term portion ...... $ 61,788 66,516

Other Long-Term Liabilities Other long-term liabilities consisted of the following (in thousands):

October 31, 2017 2016 Unrecognized tax benefits liability, net ...... $37,412 $33,745 Contingent consideration payable ...... — 5,254 Other long-term liabilities ...... 38,677 37,841 Total other long-term liabilities ...... $76,089 $76,840

102 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accumulated Other Comprehensive Loss Activity related to Accumulated other comprehensive loss consisted of the following (in thousands):

Unrealized gain (loss) on Foreign derivatives currency designated translation as cash flow adjustments (1) hedges (2) Other (3) Total Balance at October 31, 2015 ...... $(286,662) $(4,409) $(1,250) $(292,321) Losses before reclassifications, net of tax ...... (46,618) (1,971) — (48,589) Amounts reclassified from Accumulated other comprehensive loss, net of tax ...... — 3,961 (4,045) (84) Other comprehensive income (loss) ...... (46,618) 1,990 (4,045) (48,673) Balance at October 31, 2016 ...... (333,280) (2,419) (5,295) (340,994) Gains before reclassifications, net of tax ...... 60,512 3,062 — 63,574 Amounts reclassified from Accumulated other comprehensive loss, net of tax ...... 7,711 1,171 1,966 10,848 Other comprehensive income ...... 68,223 4,233 1,966 74,422 Balance at October 31, 2017 ...... $(265,057) $ 1,814 $(3,329) $(266,572)

(1) Amounts reclassified from Accumulated other comprehensive loss, net of tax, were recorded in Redeemable noncontrolling interest in subsidiary and Noncontrolling interests in subsidiaries in the Consolidated Balance Sheets. (2) Amounts reclassified from Accumulated other comprehensive loss, net of tax, were recorded in Interest expense, net in the Consolidated Statements of Operations. The related tax impacts were insignificant. (3) Amounts reclassified from Accumulated other comprehensive loss, net of tax, were recorded in General and administrative expenses in the Consolidated Statements of Operations. The related tax impacts were insignificant.

Note 8. Financial Instruments Fair Value Measurements Our financial assets and liabilities consist principally of cash, accounts receivable, accounts payable, debt, foreign exchange forward contracts, and interest rate swaps, and are reported at fair value. The estimated fair value of cash, accounts receivable, and accounts payable approximates their carrying value. The estimated fair value of our debt approximates the carrying value because the interest rate on such debt adjusts to market rates on a periodic basis. Foreign exchange forward contracts, interest rate swaps, and contingent consideration payable are recorded at estimated fair value on a recurring basis.

2017 10-K 103 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis The following tables present our significant assets and liabilities that are measured at fair value on a recurring basis and their classification within the fair value hierarchy (in thousands). There were no transfers between levels of fair value hierarchy in the fiscal years ended October 31, 2017 and 2016.

October 31, 2017 October 31, 2016 Carrying Carrying Value Level 1 Level 2 Level 3 Value Level 1 Level 2 Level 3 Assets Other current and long-term assets: Foreign exchange forward contracts not designated as hedging instruments ...... $ 238 $— $ 238 $— $ 69 $— $ 69 $ — Interest rate swap agreements designated as cash flow hedges ...... 3,745 — 3,745 — 301 — 301 — Total assets measured and recorded at fair value ...... $3,983 $— $3,983 $— $ 370 $— $ 370 $ — Liabilities Other current and long-term liabilities: Contingent consideration payable . . . $ — $— $ — $— $5,997 $— $ — $5,997 Foreign exchange forward contracts not designated as hedging instruments ...... 115 — 115 — 153 — 153 — Interest rate swap agreements designated as cash flow hedges ...... — — — — 2,676 — 2,676 — Total liabilities measured and recorded at fair value ...... $ 115 $— $ 115 $— $8,826 $— $2,829 $5,997

Fair Value of Contingent Consideration Payable Contingent consideration payable at October 31, 2016 is comprised of amounts payable related to acquisitions and is classified as Level 3 because we use significant unobservable inputs to determine the expected payments and an appropriate discount rate to calculate the fair value. There is no contingent consideration payable at October 31, 2017 because our obligation for the majority of the October 31, 2016 contingent consideration was canceled in connection with the Gas Media exchange transaction, see Note 2, Business Combinations. No other remaining contingent consideration is expected to be paid. The maximum liability of the remaining contingent consideration payable is indeterminate because it is based on contributions from the acquired business.

Derivative Financial Instruments Interest Rate Swap Agreements Designated as Cash Flow Hedges We use interest rate swap agreements to hedge the variability in cash flows related to interest payments. As of October 31, 2017, we have outstanding interest rate swap agreements to effectively convert $400.0 million of the term A loan from a floating rate plus applicable margin to a fixed rate of 1.20% plus applicable margin through March 30, 2018. In addition, we have an outstanding interest rate swap agreement to effectively convert $350.0 million of the term A loan to a fixed rate of 0.975% plus applicable margin from March 30, 2018 through June 30, 2019.

104 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The interest rate swaps qualify for hedge accounting treatment as cash flow hedges. The notional amounts of interest rate swap agreements outstanding as of October 31, 2017 and October 31, 2016 were $400.0 million and $500.0 million, respectively.

As of October 31, 2017, the estimated net derivative gain related to our cash flow hedges included in Accumulated other comprehensive loss that will be reclassified into earnings in the next 12 months is $1.5 million.

Foreign Exchange Forward Contracts Not Designated as Hedging Instruments We arrange and maintain foreign currency exchange forward contracts so as to yield gains or losses to offset changes in foreign currency denominated assets or liabilities due to changes in foreign exchange rates, with the objective to mitigate the volatility associated with foreign currency transaction gains or losses. Our foreign currency exposures are predominantly inter-company receivables and payables arising from product sales and loans from one of our entities to another. Our foreign exchange forward contracts generally mature within 90 days. The notional amounts of such contracts outstanding as of October 31, 2017 and October 31, 2016 were $255.2 million and $175.0 million, respectively.

We recognized the following gains (losses) on foreign exchange forward contracts not designated as cash flow hedges (in thousands):

Years Ended October 31, 2017 2016 2015 Gains (losses) recognized in Other income (expense), net in our Consolidated Statements of Operations ...... $4,310 $(1,988) $17,113

Note 9. Equity Investments Consolidated variable interest entity We have a 51% equity interest in Panaroma and have determined it is a variable interest entity and that we are the primary beneficiary. Consequently, we consolidate the entity and reflect the non-controlling interest of the entity in our financial statements.

The minority shareholder holding the remaining 49% of Panaroma has a put option that is exercisable for three years after January 1, 2020 and if exercised requires us to purchase the remaining 49% equity of Panaroma at a multiple of earnings before taxes, depreciation and amortization for the year ended December 31, 2019. Since the noncontrolling interest is redeemable at the option of the minority shareholder and is outside our control, it is reported in the mezzanine section in the Consolidated Balance Sheets and recognized at the greater of the initial carrying amount increased or decreased for the noncontrolling interest’s share of net income or loss, or its redemption value.

In addition to our equity investment in Panaroma, we have also entered into other arrangements such as reseller and service agreements. We have no obligation to provide ongoing funding other than the put option described above. However in the first quarter of the fiscal year ended January 31, 2018, we provided a nominal financial support to Panaroma and revised certain payment terms relating to purchases of inventory to assist them with their working capital needs.

Equity method investment We have a 50% equity interest in Gas Media and have determined that Gas Media is not a variable interest entity. The carrying value of our investment in Gas Media is $16.8 million as of October 31, 2017.

We have made the election to use a one-month lag to record our share of Gas Media’s results. Our share of the losses of Gas Media was $2.4 million for the fiscal year ended October 31, 2017. Our basis difference between the investment in Gas Media and the amount of underlying equity in net assets is $9.8 million as of October 31, 2017.

2017 10-K 105 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In addition, we have agreed to guarantee, in certain circumstances, up to $12.5 million out of a total of $83.8 million of debt issued to Gas Media. Our maximum exposure is based on the carrying value of investment to date and the extent of our guarantee. As of October 31, 2017, we have not made any payments and no amounts are accrued related to this guarantee.

Cost method investments We have investments accounted for under the cost method that have a nominal carrying value as of the fiscal year ended October 31, 2017 and 2016. Two of these investments are in variable interest entities where we are not the primary beneficiary. Our known maximum exposure to loss on the variable interest entities is $13.8 million as of the fiscal year ended October 31, 2017, and relates primarily to future borrowings on a committed line of credit available to one of our investees. These investments do not have a readily determinable fair values and we did not record any other-than-temporary impairments for the fiscal years ended October 31, 2017 and 2016.

We periodically evaluate the carrying value of our equity investments, when events and circumstances indicate the investment may not be recoverable. As part of this evaluation, we estimate the fair value of the equity investments using Level 3 inputs. These investments include our holdings in privately-held companies that are not exchange traded and therefore not supported with observable market prices, hence we may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the private company, the amount of cash that the privately-held company has on-hand, the ability to obtain additional financing and overall market conditions in which the private company operates.

Note 10. Goodwill and Purchased Intangible Assets Goodwill Activity related to goodwill by reportable segment consisted of the following (in thousands):

North Latin Verifone Verifone America EMEA America Asia-Pacific Systems Services Total Balance at October 31, 2015 ...... $106,641 $ 810,062 $ 85,797 $ 81,531 $ — $ — $1,084,031 Segment reallocation ...... (106,641) (810,062) (85,797) (81,531) 512,182 571,849 — Acquisitions ...... — — — — 6,090 68,281 74,371 Other adjustments ...... — — — — — (3,431) (3,431) Currency translation adjustments .... — — — — (21,146) (23,332) (44,478) Balance at October 31, 2016 ...... — — — — 497,126 613,367 1,110,493 Additions ...... — — — — — 5,647 5,647 Goodwill impairment ...... — — — — — (17,384) (17,384) Reclassification to assets held for sale ...... — — — — — (28,327) (28,327) Disposals ...... — — — — — (10,096) (10,096) Currency translation adjustments .... — — — — 17,778 26,259 44,037 Balance at October 31, 2017 ...... $ — $ — $ — $ — $514,904 $589,466 $1,104,370

During December 2015, our Chief Executive Officer realigned the company’s organizational structure to focus on two operating segments: Verifone Systems and Verifone Services. In connection with the operating segment realignment, during the three months ended January 31, 2016, we updated our goodwill impairment assessment based on a quantitative analysis. We first evaluated the goodwill of our reporting units immediately prior the realignment and concluded that there was no impairment. We then allocated our goodwill to the new reporting units using a relative fair value approach, and re-confirmed that there is no impairment.

During the fourth quarters of fiscal year 2017 and 2016, we completed our annual impairment assessments and concluded that goodwill was not impaired in either year. We used the qualitative method in our 2017 and

106 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2016 annual assessments related to both of our reporting units. We used the quantitative approach in our 2016 assessment related to our former Taxi Solutions reporting unit.

During the second quarter of fiscal year 2017, management concluded that the carrying amount of the goodwill related to our former Taxi Solutions reporting unit may not be recoverable, and based on a quantitative assessment, considering potential sales transactions, management determined the fair value of the reporting unit and concluded that the goodwill was impaired by $17.4 million. Also, during the second quarter of fiscal year 2017, our management committed to a plan to sell our former Taxi Solutions reporting unit, and the remaining $28.3 million of goodwill in our former Taxi Solutions reporting unit was reclassified to assets held for sale. See Note 12, Restructuring and Related Charges, for additional information.

Purchased Intangible Assets, Net Purchased Intangible assets, net consisted of the following (in thousands):

October 31, 2017 October 31, 2016 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Customer relationships ...... $498,951 $(282,176) $216,775 $521,964 $(249,513) $272,451 Other ...... 40,715 (21,112) 19,603 73,175 (39,328) 33,847 Total ...... $539,666 $(303,288) $236,378 $595,139 $(288,841) $306,298

Other intangible assets, net, were comprised primarily of developed and core technology.

When purchased intangible assets reach the end of their useful lives, gross carrying amount and accumulated amortization are offset. During the fiscal year ended October 31, 2017, we offset $44.6 million of Gross carrying amount and Accumulated amortization of intangible assets related to customer relationships and $29.9 million related to other intangible assets, because they reached the end of their useful lives.

Activity related to purchased intangible assets during the fiscal year ended October 31, 2017 includes a $29.3 million currency translation adjustment to Gross carrying amount and a $17.0 million currency translation adjustment to Accumulated amortization.

Amortization of purchased intangible assets was allocated as follows (in thousands):

Years Ended October 31, 2017 2016 2015 Included in Cost of net revenues ...... $ 6,727 $ 15,130 $ 18,307 Included in Operating expenses ...... 69,622 90,534 82,492 Total amortization of purchased intangible assets ...... $76,349 $105,664 $100,799

2017 10-K 107 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Total future amortization expense for purchased intangible assets that have finite lives, based on our existing intangible assets and their current estimated useful lives as of October 31, 2017, is estimated as follows (in thousands):

Cost of Operating Net Revenues Expenses Total Fiscal Years Ending October 31: 2018 ...... $ 5,357 $ 57,455 $ 62,812 2019 ...... 5,235 51,871 57,106 2020 ...... 3,528 43,910 47,438 2021 ...... 2,353 31,973 34,326 2022 ...... 203 16,709 16,912 Thereafter ...... — 17,784 17,784 Total future amortization expense ...... $16,676 $219,702 $236,378

Note 11. Financings Amounts outstanding under our financing arrangements consisted of the following (in thousands):

October 31, 2017 2016 Credit Agreement Term A loan ...... $465,000 $525,000 Term B loan ...... 193,500 195,500 Revolving loan ...... 168,447 204,684 Capital leases and other debt ...... 10,734 11,573 Total principal payments due ...... 837,681 936,757 Less: original issue discount and debt issuance costs ...... (6,867) (10,844) Total amounts outstanding ...... 830,814 925,913 Less: current portion ...... (68,770) (66,017) Long-term portion ...... $762,044 $859,896

Credit Agreement On December 28, 2011, we entered into a credit agreement which was amended on July 8, 2014. The amended and restated agreement provides for an aggregate amount of up to $1.3 billion of debt consisting of a $600.0 million term A loan, $200.0 million term B loan and $500.0 million revolving loan commitment.

Borrowings under the credit agreement bear interest at a “Base Rate” or “Eurodollar Rate”, at our option, plus an applicable margin based on certain financial ratios, determined and payable quarterly. In addition, we pay an undrawn commitment fee on the unused portion of the revolving loan ranging from 0.25% to 0.50% per annum, depending on our leverage ratio.

The outstanding principal balance of the term A loan is required to be repaid in quarterly installments of the following percentages of the original balance outstanding under the term A loan: 1.25% for each quarter from the quarter ending September 30, 2014 through the quarter ending June 30, 2016; 2.50% for each quarter from the quarter ending September 30, 2016 through the quarter ending June 30, 2019, with the balance being due at maturity on July 8, 2019. The outstanding principal balance of the term B loan is required to be repaid in equal quarterly installments of 0.25% of the original balance outstanding under the term B loan, with the balance being due at maturity on July 8, 2021. The revolving loan terminates on July 8, 2019. Outstanding amounts may also be subject to mandatory repayment with the proceeds of certain asset sales, and debt issuances, and, in the case of the term B loan only, from a portion of annual excess cash flows depending on our total leverage ratio, as defined under the agreement.

108 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Additional terms of the credit agreement require compliance with financial covenants that require us to maintain financial ratios related to interest coverage and financial leverage. We were in compliance with these financial covenants as of October 31, 2017. The credit agreement also contains representations and warranties, affirmative covenants, negative covenants, financial covenants and conditions that are customarily required for similar financings including the following, among others: • A restriction on incurring additional indebtedness, subject to specified permitted debt; • A restriction on creating certain liens, subject to specified exceptions; • A restriction on mergers and consolidations, subject to specified exceptions; • A restriction on asset dispositions, subject to specified exceptions for ordinary course and other transactions; • A restriction on certain investments, subject to certain exceptions and a suspension if we achieve certain credit ratings; • A restriction on the payment of dividends, subject to specified exceptions; and • A restriction on entering into certain transactions with affiliates, subject to specified exceptions.

Borrowings under the credit agreement are guaranteed by certain of our wholly owned domestic subsidiaries and secured by a first priority lien and security interest in certain of our assets, subject to customary exceptions.

As of October 31, 2017, we have elected the Eurodollar option for all of our borrowings. Eurodollar loans bear interest at a monthly market interest rate plus a margin according to the credit agreement. As of October 31, 2017, the monthly market interest rate was 1.25% for our term A and revolver loans, and 1.25% for our term B loan, and the margins were 2.00% for our term A and revolver loans and 2.75% for our term B loan. Accordingly, as of October 31, 2017, the interest rate was 3.25% for the term A and revolving loans and 4.00% for the term B loan.

We have a number of interest rate swap agreements under which we currently pay banks a fixed rate of 1.20% and receive a monthly floating rate, which effectively converts $400.0 million of the term A loan from a floating interest rate to a fixed interest rate as of October 31, 2017. See Note 8, Financial Instruments, for additional information.

As of October 31, 2017, the commitment fee for the unused portion of the revolving loan was 0.25% per annum, payable quarterly in arrears, and the amount available to draw under the revolving loan was $331.6 million.

Principal Payments Future principal payments due under our financing arrangements are as follows (in thousands):

Amounts Years Ending October 31: 2018 ...... $ 69,101 2019 ...... 577,737 2020 ...... 3,036 2021 ...... 187,568 2022 ...... 23 Thereafter ...... 216 Total ...... $837,681

2017 10-K 109 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 12. Restructuring and Related Charges As part of cost optimization and corporate transformation initiatives, our management has approved, committed to and initiated various restructuring plans to reduce headcount, exit under-performing businesses, and consolidate facilities and data centers.

Activity related to our restructuring and related accruals for the fiscal years ended October 31, 2017 and 2016 consisted of the following (in thousands):

Restructuring Plans June 2017 Prior year Plans June 2016 Plan Plan Employee Employee Employee Involuntary Facilities Involuntary Facilities Involuntary Other Termination Related Termination Related Termination Business Benefits Costs Benefits Costs Benefits Exit Costs Total Balance at October 31, 2015 .... $ 6,117 $ 5 $ — $ — $ — $ — $ 6,122 Charges, net of adjustments ...... (172) — 11,907 3,430 — — 15,165 Cash payments ...... (4,245) (5) (6,682) (623) — — (11,555) Balance at October 31, 2016 .... $ 1,700 $ — $ 5,225 $ 2,807 $ — $ — $ 9,732 Charges, net of adjustments ...... (817) — 6,092 (767) 11,819 28,686 45,013 Cash payments ...... (883) — (8,220) (1,043) (6,388) (10,319) (26,853) Balance at October 31, 2017 .... $ — $— $ 3,097 $ 997 $ 5,431 $ 18,367 $ 27,892 Cumulative costs to date ...... $18,655 $853 $18,005 $ 2,725 $11,819 $ 28,686

Activities under these Restructuring Plans are expected to be substantially complete by the end of fiscal year 2018. Restructuring and related charges were allocated as follows (in thousands):

Years Ended October 31, 2017 2016 2015 Included in Cost of net revenues ...... $ 25,726 $ 5,125 $ 348 Included in Operating expenses ...... 143,152 41,254 8,429 Total restructuring and related charges ...... $168,878 $46,379 $8,777

Petro Media restructuring During fiscal year 2017, our management committed to and completed a plan to exit our petroleum media business, which was part of our Verifone Services segment. In connection with this decision, we contributed certain assets to Gas Media, terminated certain customer agreements and classified the remaining assets of this business as held for sale, resulting in a $49.1 million write-down to reflect the assets held for sale at fair value, of which $10.6 million is included in Cost of net revenues and $38.5 million is included in Restructuring and related charges in the Consolidated Statements of Operations. We also recorded a $28.1 million expense during the fiscal year ended October 31, 2017, for estimated future obligations associated with the terminated customer agreements of which $18.4 million was unpaid as of October 31, 2017.

Taxi Solutions restructuring During the second quarter of fiscal year 2017, our management committed to a plan to sell our former Taxi Solutions reporting unit and we classified the net assets and liabilities of this business as held for sale. The net assets held for sale are presented at fair value and classified as Level 3 because we use significant unobservable inputs to determine the fair value. The fair value was initially determined during the second quarter of fiscal year

110 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2017 in connection with the quantitative assessment of goodwill impairment discussed in Note 10, Goodwill and Purchased Intangible Assets. Additionally, based upon continued negotiations of potential sales transactions, management updated the fair value of the assets held for sale during fiscal year 2017, resulting in charges totaling $50.2 million, which are included in Restructuring and related charges in the Consolidated Statements of Operations.

The following table reflects the October 31, 2017 carrying value of the Taxi Solutions assets and liabilities that are classified as held for sale (in thousands):

October 31, 2017 Accounts Receivable ...... $11,908 Prepaid expenses and other current assets ...... 14,102 Revenue generating assets and other fixed assets ...... 35,245 Purchased intangibles assets, net ...... 5,786 Goodwill ...... 46,978 Accounts payable, accruals and other current liabilities ...... (15,721) Other ...... (2,859) Carrying Value ...... 95,439 Goodwill impairment ...... (17,384) Fair value adjustments ...... (50,215) Fair value of assets held for sale ...... $27,840

The gross assets held for sale are presented in Prepaid expenses and other current assets in the Consolidated Balance Sheet and the gross liabilities held for sale are presented in Accruals and other current liabilities in the Consolidated Balance Sheet.

Losses before income taxes on our Taxi Solutions business incurred during fiscal year 2017 was $74.7 million, $16.8 million and $5.5 million for the fiscal years ended October 31, 2017, 2016, and 2015 respectively.

On December 11, 2017, we divested our Taxi Solutions business for $22.5 million in cash paid at closing plus $7.5 million due in March 2018. In connection with the transaction, we received a 10% common stock equity interest in a limited liability company that is an indirect parent of the buyer and is partially owned by the former general manager of this business. The purchase price is subject to upward adjustment based on working capital in certain circumstances. The buyer assumed responsibility for the $50.3 million of operating lease commitments associated with the Taxi Solution business, as discussed in Note 13, Commitments and Contingencies, and we have retained certain guarantees of these leases, for which we are indemnified.

China business restructuring During June 2017, we divested our controlling interest in the entity that operated our China business, including primarily Accounts receivable, Inventories, Prepaid expenses and other current assets, as well as Accounts payable, and Accruals and other current liabilities, resulting in a $24.4 million charge, of which $11.1 million is included in Cost of net revenues and $13.3 million is included in Restructuring and related charges in the Consolidated Statements of Operations. See Note 2, Business Combinations, for additional information on the divestiture.

Losses before income taxes on our China business was $33.2 million, $15.6 million and $7.6 million for the fiscal years ended October 31, 2017, 2016, and 2015 respectively.

Other fiscal year 2016 business restructurings During fiscal year 2016, our management committed to a plan to exit certain under-performing businesses. We classified the assets of these businesses as held for sale and recorded a $22.0 million write-down to reflect

2017 10-K 111 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) the assets held for sale at fair value during fiscal year 2016. This write-down is included in Restructuring and related charges in the Consolidated Statements of Operations. Additionally, during fiscal year 2016 we recorded a $9.2 million charge for costs to terminate a contract related to a service we will no longer offer, of which $2.9 million is included in cost of net revenues and $6.3 million is included in Restructuring and related charges in the Consolidated Statement of Operations.

Note 13. Commitments and Contingencies Commitments Leases We lease certain facilities under non-cancelable operating leases that contain free rent periods, leasehold improvement rebates or rent escalation clauses. Rent expense under these leases is recorded on a straight-line basis over the lease term. We are committed to pay a portion of the related actual operating expenses under some of these lease agreements, and those operating expenses are not included in the table below. The difference between amounts paid and rent expense is recorded as deferred rent. The short-term and long-term portions are included in Accruals and other current liabilities and Other long-term liabilities, respectively, in our Consolidated Balance Sheets.

In connection with our Taxi Solutions business, we have entered into operating lease arrangements for the right to place advertising in or on taxicabs. In general, these lease arrangements, which will be assigned in connection with the divestiture of the Taxi Solutions business, are non-cancelable for terms ranging from three to eight years, require us to pay minimum lease amounts based on the types and locations of the advertising displays in or on the taxicabs, and are subject to fee escalation clauses. Based upon the number of operational taxicabs with our advertising displays at October 31, 2017, these lease commitments total $50.3 million and are included in the future minimum lease payments in the table below.

Future minimum lease payments under these leases as of October 31, 2017 were as follows (in thousands):

Minimum Sublease Net Minimum Lease Payments Rental Income Lease Payments Years Ending October 31: 2018 ...... $ 40,363 $ (646) $ 39,717 2019 ...... 29,187 (659) 28,528 2020 ...... 23,923 (673) 23,250 2021 ...... 17,020 (687) 16,333 2022 ...... 10,221 (701) 9,520 Thereafter ...... 8,930 (1,449) 7,481 Total ...... $129,644 $(4,815) $124,829

Rent expense consisted of the following (in thousands):

Years Ended October 31, 2017 2016 2015 Rent expense for non-cancelable taxi operating leases ...... $27,932 $32,543 $35,297 Facility and other rent expense ...... 26,634 27,706 26,885 Total rent expense ...... $54,566 $60,249 $62,182

Manufacturing Related Agreements We work on a purchase order basis with our contract manufacturers, which are located in China, Singapore, Malaysia, Brazil, and Germany, and component suppliers located throughout the world, to supply nearly all of our

112 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) finished goods inventories, spare parts, and accessories. We provide each such supplier with a purchase order to cover the manufacturing requirements, which generally constitutes a binding commitment by us to purchase materials and finished goods produced by the manufacturer as specified in the purchase order. Most of these purchase orders are considered to be non-cancelable and are expected to be paid within one year of the issuance date. As of October 31, 2017, the amount of purchase commitments issued to contract manufacturers and component suppliers totaled approximately $113.5 million. Of this amount, $8.3 million has been recorded in Accruals and other current liabilities in our Consolidated Balance Sheets because these commitments are not expected to have future value to us.

On April 3, 2017, to lock in pricing on certain components, we committed to purchase $144.0 million of such components over a four year period, $36.0 million per year, from one of our existing suppliers. As of October 31, 2017 our remaining non-cancelable commitment under this agreement totaled $103.9 million.

Bank Guarantees We have issued bank guarantees with maturities ranging from two months to eight years to certain of our customers and vendors as required in some countries to support certain performance obligations under our service or other agreements with those parties. As of October 31, 2017, the maximum amount that may become payable under these guarantees was $15.9 million, of which $2.1 million was collateralized by restricted cash deposits.

In addition, in connection with our investment in Gas Station TV we have agreed to guarantee, in certain circumstances, up to$12.5 million of debt issued to Gas Media. As of October 31, 2017, we have not made any payments and no amounts are accrued related to this guarantee.

Contingencies We evaluate the circumstances regarding outstanding and potential litigation and other contingencies on a quarterly basis to determine whether there is at least a reasonable possibility that a loss exists requiring accrual or disclosure, and if so, whether an estimate of the possible loss or range of loss can be made, or whether such an estimate cannot be made. When a loss is probable and reasonably estimable, we accrue for such amount based on our estimate of the probable loss considering information available at the time. When a loss is reasonably possible, we disclose the estimated possible loss or range of loss in excess of amounts accrued, if material. Except as otherwise disclosed below, we do not believe that material losses were probable or that there was a reasonable possibility that a material loss may have been incurred with respect to the matters disclosed.

Brazilian Tax Assessments State Value-Added Tax The Brazilian subsidiary we acquired as part of our acquisition of Hypercom in August 2011 received an unfavorable administrative decision on a tax enforcement action against it filed by the São Paulo State Revenue Department for collection of state sales taxes related to purported sales of software for the 1998 and 1999 tax years. In 2004, an appeal against this unfavorable administrative decision was filed in a judicial proceeding. The first level decision in the judicial proceeding was issued in our favor. The São Paulo State Revenue Department filed an appeal of this decision. The second level administrative decision ordered that the case be returned to the lower court in order to allow the production of further evidence. That evidence production has now concluded, and we are awaiting judgment. Based on our current understanding of the underlying facts of this matter, we believe it is reasonably possible that we may receive an unfavorable decision in this proceeding. The tax assessment including estimated interest through October 31, 2017 for this matter totals approximately 9.4 million Brazilian reais (approximately $2.9 million at the foreign exchange rate as of October 31, 2017). As of October 31, 2017, we have not accrued for this matter, but we have posted a bank bond as a guaranty.

2017 10-K 113 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Municipality Services Tax Assessments In December 2009, one of the Brazilian subsidiaries that was acquired as part of the Lipman acquisition was notified of a tax assessment regarding alleged nonpayment of tax on services rendered for the period from September 2004 to December 2004. This assessment was issued by the municipality of São Paulo (the “municipality”) and asserts a services tax deficiency and related penalties totaling $0.9 million Brazilian reais (approximately $0.3 million at the foreign exchange rate as of October 31, 2017), excluding interest. The municipality claims that the Brazilian subsidiary rendered certain services within the municipality of São Paulo but simulated that those services were rendered in another city. At the end of December 2010 the municipality issued further tax assessments alleging the same claims for 2005 through June 2007. These additional subsequent claims assert services tax deficiencies and related penalties totaling 5.9 million Brazilian reais (approximately $1.8 million at the foreign exchange rate as of October 31, 2017), excluding interest. We received unfavorable decisions from the administrative courts, which ruled to maintain the tax assessments for each of these matters. No further grounds of appeal are available to us for these assessments within the administrative courts. In October 2012, as a result of the decision at the administrative level, the tax authorities filed an enforcement action in the civil courts to collect on the services tax assessments amounts awarded by the administrative court and seeking other related costs and fees. On March 6, 2013, we filed our defensive claims in the civil courts in response to the tax authorities’ enforcement action. In February 2013 the tax authorities filed an additional enforcement action in the civil courts to collect on the penalties related to the services tax assessments amounts awarded by the administrative courts. Based on our understanding of the underlying facts of this matter and our evaluation of the potential outcome at the judicial level, we believe it is reasonably possible that our Brazilian subsidiary will be required to pay some amount of the alleged tax assessments and penalties related to these matters, as well as amounts of interest and certain costs and fees imposed by the court related thereto. As of October 31, 2017, the amount of the alleged tax assessments and penalties related to these matters was approximately 26.8 million Brazilian reais (approximately $8.2 million at the foreign exchange rate as of October 31, 2017), including interest, costs and fees related thereto.

The Brazilian subsidiary we acquired as part of our acquisition of Hypercom in August 2011 received an unfavorable administrative decision on a tax enforcement action against it filed by the municipality of Curitiba for collection of alleged services tax deficiency. An appeal against this unfavorable administrative decision was filed in a judicial proceeding and currently the case is pending the municipality of Curitiba’s compliance with the writ of summons. As of October 31, 2017, the underlying assessment, including estimated interest, was approximately 6.0 million Brazilian reais (approximately $1.8 million at the foreign exchange rate as of October 31, 2017). Based on our current understanding of the underlying facts of this matter, we believe it is reasonably possible that we may receive an unfavorable decision in this proceeding.

Israel Securities Class Actions On January 27, 2008, a class action complaint was filed against us in the Central District Court in Tel Aviv, Israel on behalf of purchasers of our stock on the Tel Aviv Stock Exchange. The complaint sought compensation for damages allegedly incurred by the class of plaintiffs due to the publication of erroneous financial reports. On April 2, 2015, the Israeli Supreme Court ruled that the applicable law is U.S. law and dismissed this action as estopped by settlement of the similar consolidated federal securities class action in the U.S. (In re VeriFone Holdings, Inc., previously reported). The plaintiff and putative class members in this Israeli action are included in the stipulated settlement of the U.S. class action unless an individual plaintiff opts out. On June 29, 2015, the plaintiff filed a motion for award of compensation and attorneys’ fees based on the amount of settlement compensation received by Israelis in the U.S. class action. On January 14, 2016, the Israeli District Court denied this motion. Plaintiff has not timely appealed, that ruling is now final, and this 2008 action is now concluded.

On May 12, 2015, a new class action complaint was filed against us in Israel alleging similar claims as the dismissed Israeli class action and alleging that Israeli shareholders were deprived of due process in the U.S. class action settlement proceedings. We are opposing the new class action and plaintiff’s class certification motion on substantially the same grounds on which the previous case was dismissed. The court held a pretrial hearing on that motion on May 19, 2016, at which it requested additional information including expert reports, a position paper from the Israel Securities Authority (ISA) and further briefing. In July 2016, the ISA submitted a position

114 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) paper supporting our position regarding applicable law. Other requested information has also now been submitted, but the court has not yet ruled.

Dolled v. Bergeron et al. On April 19, 2013, a derivative action, Dolled v. Bergeron et al., Case No. 113-CV-245056, was filed in the Superior Court of California, County of Santa Clara in connection with our February 20, 2013 announcement of preliminary financial results for the fiscal quarter ended January 31, 2013. The action, brought derivatively on behalf of Verifone, named Verifone as a nominal defendant and brought claims for insider selling, breach of fiduciary duty and unjust enrichment variously against certain of our current and former officers and directors. The complaint sought unspecified monetary damages, restitution and disgorgement of profits and compensation paid to defendants, injunctive relief directing us to reform its corporate governance, and payment of the plaintiff’s costs and attorneys’ fees. On May 30, 2013, the court entered the parties’ stipulation and proposed order, which appointed plaintiff and plaintiff’s counsel as lead plaintiff and lead counsel, respectively, in the consolidated action, captioned In re VeriFone Systems, Inc. Derivative Litigation.

In light of the below-mentioned Zoumboulakis judgment, the plaintiff voluntarily dismissed this action with prejudice on October 23, 2017. This matter is now concluded.

Zoumboulakis v. McGinn et al. On May 24, 2013, a federal derivative action, Zoumboulakis v. McGinn et al., Case No. 13-CV-02379, was filed in the U.S. District Court for the Northern District of California against certain current and former directors and officers derivatively on our behalf. The complaint, which named us as a nominal defendant, alleged breach of fiduciary duty and abuse of control and asserted claims under Section 14(a) of the Securities Exchange Act of 1934 for false or misleading financial statements and proxy statement disclosures. The original complaint sought unspecified monetary damages, including exemplary damages, restitution from defendants, injunctive relief directing us to make certain corporate governance reforms, and payment of the plaintiff’s costs and attorneys’ fees. On August 12, 2013, the court granted defendants’ motion to relate this action to the pending shareholder class action, Sanders v. VeriFone Systems, Inc. et al. On January 21, 2014, plaintiff filed a first amended complaint, which removed one of our former officers from the action and added an additional former director as a defendant. The first amended complaint asserted claims against the defendants for breach of fiduciary duty, abuse of control, violations of Securities Exchange Act Section 14(a) and unjust enrichment. The first amended complaint also included claims for insider trading against three of the named former and current directors. On August 7, 2014, the court granted our motion to dismiss the first amended complaint with leave to amend. On October 17, 2014, plaintiff filed a second amended complaint, to which we responded by filing another motion to dismiss. On December 3, 2015, the court granted our motion to dismiss, again with leave to amend. On January 20, 2016, plaintiff filed a third amended complaint alleging demand futility with respect to the current Board. On March 1, 2016, we filed another motion to dismiss, which the court granted with prejudice on September 22, 2017, entering judgment in favor of defendants. Because no appeal was filed timely, this matter is now concluded.

Indian Antitrust Proceedings The Competition Commission of India (CCI) investigated certain complaints made against us alleging unfair practices based on certain provisions in our software development license arrangements in India. We cooperated with requests by the CCI in its investigation. In March 2014, the Director General of the CCI investigating the allegations issued a report rejecting certain of the allegations, but also finding that certain provisions of our licenses may constitute unfair business practices. VeriFone India Sales Pvt. Ltd. filed objections to that report.

In April 2015, the CCI issued rulings directing Verifone India to cease and desist from engaging in the alleged anti-competitive conduct and imposing a penalty, the amount of which is not material to our results of operations. We have deposited 10% of this penalty amount and accrued the balance while we appeal these rulings.

2017 10-K 115 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On June 15, 2015, we filed appeals and interim applications with the Competition Appellate Tribunal (COMPAT) to stay the CCI orders. The appellate court granted our interim applications to stay all proceedings at least until the final appellate hearing. That appellate hearing commenced on January 19, 2016, and was next scheduled to continue on May 31, 2017, but was taken off that tribunal’s calendar due to the May 26, 2017 merger of the COMPAT with the National Company Law Appellate Tribunal (NCLAT). These appeals are now being reheard before the NCLAT Bench. That rehearing began on November 7, 2017, and is scheduled to continue on January 5, 2018.

The CCI’s rulings reserved the right to pursue additional proceedings against individuals that it deems responsible for the alleged conduct. We are unable to make any estimate of potential loss for any further proceedings the CCI may pursue but do not expect it to be material to our results of operations.

Other Litigation Certain of the foregoing cases are still in the preliminary stages, and we are not able to quantify the extent of our potential liability, if any, other than as described above. Further, the outcome of litigation is inherently unpredictable and subject to significant uncertainties. If any of these matters are resolved adversely to us, this could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, defending these legal proceedings is likely to be costly, which may have a material adverse effect on our financial condition, results of operations and cash flows, and may divert management’s attention from the day-to-day operations of our business. We are subject to various other legal proceedings related to commercial, customer and employment matters that have arisen during the ordinary course of business. The outcome of such legal proceedings is inherently unpredictable and subject to significant uncertainties. Although there can be no assurance as to the ultimate disposition of these matters, our management has determined, based upon the information available at the date of these financial statements, including anticipated expected availability of insurance coverage, that the expected outcome of these matters, individually or in the aggregate, will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Income Tax Uncertainties As of October 31, 2017, the amount payable for unrecognized tax benefits was $37.4 million, including accrued interest and penalties, none of which is expected to be paid within one year. This amount is included in Other long-term liabilities in our Consolidated Balance Sheet as of October 31, 2017. We are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority may occur.

Note 14. Segment and Geographic Information Net revenues and operating income (loss) of each segment reflect net revenues and expenses that are directly attributable to that segment. Net revenues and expenses not allocated to segment net revenues and segment operating income include amortization of purchased intangible assets, amortization of step-down in deferred services net revenues and associated costs of net revenues at acquisition, restructuring and related charges, goodwill impairment, stock-based compensation, as well as general and administrative and corporate research and development expense. We do not allocate other income and expenses to our operating segments. Also, we do not separately evaluate assets by segment and therefore assets by segment are not presented below.

116 2017 10-K VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth net revenues for our reportable segments and reconciles segment net revenues to total net revenues (in thousands):

Years Ended October 31, 2017 2016 2015 Segment net revenues: Verifone Systems ...... $1,085,478 $1,236,361 $1,309,629 Verifone Services ...... 788,491 769,715 691,822 Total segment net revenues ...... 1,873,969 2,006,076 2,001,451 Amortization of step down in deferred services net revenues at acquisition ...... (2,993) (13,927) (994) Total net revenues ...... $1,870,976 $1,992,149 $2,000,457

The following table sets forth operating income for our reportable segments and reconciles segment operating income to consolidated operating income (loss) (in thousands):

Years Ended October 31, 2017 2016 2015 Operating income by segment: Verifone Systems ...... $176,722 $ 252,326 $ 294,857 Verifone Services ...... 206,840 198,426 178,754 Total segment operating income ...... 383,562 450,752 473,611 Items not attributable to segment operating income: Amortization of step down in deferred services gross margin at acquisition ...... (2,385) (9,839) (994) Restructuring and related charges ...... (168,878) (46,814) (8,777) Amortization of purchase intangible assets ...... (76,349) (105,664) (100,799) Stock-based compensation expense ...... (39,903) (42,278) (42,253) Litigation settlement and loss contingency expense ...... — (650) (1,213) Goodwill impairment ...... (17,384) — — Unallocated general and administrative expenses ...... (172,380) (186,308) (187,161) Unallocated research and development expenses ...... (2,986) (14,593) (18,112) Other unallocated costs ...... (15,675) (11,827) (7,311) Total operating income (loss) ...... $(112,378) $ 32,779 $ 106,991

Depreciation and amortization of property and equipment was allocated to segments as follows (in thousands):

Years Ended October 31, 2017 2016 2015 Verifone Systems ...... $ 6,755 $ 6,177 $ 5,648 Verifone Services ...... 32,699 43,184 41,484 Unallocated ...... 26,651 13,097 11,537 Total depreciation and amortization expense ...... $66,105 $62,458 $58,669

2017 10-K 117 VERIFONE SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Geographic Information Our net revenues, by country with net revenues over 10% of total net revenues, were as follows (in thousands):

Years Ended October 31, 2017 2016 2015 United States ...... $ 627,718 $ 807,229 $ 789,386 Other countries ...... 1,243,258 1,184,920 1,211,071 Total net revenues ...... $1,870,976 $1,992,149 $2,000,457

Net revenues are allocated to countries based on the shipping destination or service delivery location of customer orders.

Property and equipment, net, by country with fixed assets over 10% of total fixed assets, were as follows (in thousands):

October 31, 2017 2016 United States ...... $ 29,146 $ 99,807 Other countries ...... 98,726 102,470 Property and equipment, net ...... 127,872 202,277

During the fiscal year 2017, we divested or reclassified as held for sale revenue generating assets and other fixed assets with a net carrying value of $74.9 million.

118 2017 10-K VERIFONE SYSTEMS, INC. Selected Quarterly Results of Operations (Unaudited) The following selected quarterly data should be read in conjunction with our Consolidated Financial Statements and accompanying notes appearing in this Item 8, Financial Statements and Supplementary Data, and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report on Form 10-K. This information has been derived from our unaudited Consolidated Financial Statements that, in our opinion, reflect all recurring adjustments necessary to fairly present our financial information when read in conjunction with our Consolidated Financial Statements and Notes. The results of operations for any quarter are not necessarily indicative of the results to be expected for any future period.

The tables below sets forth selected unaudited financial data for each quarter for the last two fiscal years (in thousands, except for per share amounts):

Year Ended October 31, 2017 First Second Third Fourth Quarter Quarter (1) Quarter (1) Quarter (1) Net revenues ...... 453,871 473,685 466,866 $476,554 Gross margin ...... 171,431 172,761 174,450 194,370 Operating income (loss) ...... (4,435) (81,394) (50,214) 23,665 Consolidated net income (loss) ...... (17,724) (89,665) (70,788) 2,858 Net income (loss) attributable to VeriFone Systems, Inc. stockholders ...... $(16,623) $ (89,267) (70,955) $ 3,016 Basic net income (loss) per share ...... $ (0.15) $ (0.80) (0.63) $ 0.03 Diluted net income (loss) per share ...... $ (0.15) $ (0.80) (0.63) $ 0.03

(1) The second, third, and fourth fiscal quarters of 2017 include $80.4 million, $78.6 million, and $7.9 million, respectively, of restructuring and related charges as part of cost optimization and corporate transformation initiatives including losses from certain disposals. For further information, see Note 12, Restructuring and related charges, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

Year Ended October 31, 2016 First Second Third Fourth Quarter Quarter (1) Quarter (1) Quarter (1) Net revenues ...... $513,539 $526,278 $488,132 $464,200 Gross margin ...... 215,285 210,379 191,147 177,500 Operating income (loss) ...... 36,216 19,779 (22,345) (871) Consolidated net income (loss) ...... 23,733 3,340 (31,498) (5,275) Net income (loss) attributable to VeriFone Systems, Inc. stockholders ...... $ 23,501 $ 2,899 $ (31,138) $ (4,543) Basic net income (loss) per share ...... $ 0.21 $ 0.03 $ (0.28) $ (0.04) Diluted net income (loss) per share ...... $ 0.21 $ 0.03 $ (0.28) $ (0.04)

(1) The third fiscal quarter of 2016 includes $38.8 million of restructuring and related charges as part of cost optimization and corporate transformation initiatives. For further information, see Note 12, Restructuring and related charges, in the Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

2017 10-K 119 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with accountants on accounting and financial disclosure during the last three fiscal years.

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Disclosure controls are procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, or the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified by the U.S. Securities and Exchange Commission. Based on management’s evaluation (with the participation of our Chief Executive Officer and Chief Financial Officer), as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), are designed to and are effective to, provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) to provide reasonable assurance regarding the reliability of our financial reporting and consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Management assessed our internal control over financial reporting as of October 31, 2017, the end of our fiscal year. Management based its assessment on the 2013 framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors.

The effectiveness of our internal control over financial reporting as of October 31, 2017 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report which is included in Item 8 of this Annual Report on Form 10-K.

Inherent Limitations on Effectiveness of Controls Our management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives

120 2017 10-K will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

ITEM 9B. OTHER INFORMATION On December 13, 2017, Albert Liu, Executive Vice President, Corporate Development and General Counsel, notified Verifone of his decision to resign from Verifone in order to pursue another professional opportunity. Mr. Liu will be assisting with the transitioning of his responsibilities through January 2018. Vikram Varma, Verifone’s Deputy General Counsel, will succeed Mr. Liu as General Counsel of Verifone. Mr. Liu’s corporate development responsibilities will be covered by Richard Char, SVP, Business Development.

PART III — OTHER INFORMATION

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE In addition to the information set forth under the caption “Executive Officers” in Part I of this Annual Report on Form 10-K, the information required by this Item is expected to be in our definitive Proxy Statement for the 2018 Annual Meeting of Stockholders (the “Proxy Statement”), which we expect to be filed within 120 days of the end of our fiscal year ended October 31, 2017 and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION Information relating to our executive officer and director compensation is incorporated herein by reference to the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information relating to security ownership of certain beneficial owners of our common stock and information relating to the security ownership of the registrant’s management is incorporated herein by reference to the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information relating to certain relationships and related transactions and director independence is incorporated herein by reference to the Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information regarding principal accountant fees and services is incorporated herein by reference to the Proxy Statement.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. The following documents are filed as part of this Annual Report on Form 10-K:

1. Consolidated Financial Statements

2017 10-K 121 The consolidated financial statements required to be filed in the Annual Report on Form 10-K and other supplemental financial information required by Item 302 of Regulation S-K are included in Item 8, Financial Statements and Supplementary Data, included elsewhere in this Annual Report on Form 10-K.

2. Financial Statement Schedule All financial statement schedules have been omitted because the required information is not present or not present in amounts sufficient to require the submission of schedules, or because the information required is included in our Consolidated Financial Statements and Notes thereto.

3. Exhibits The documents set forth below are filed herewith or incorporated by reference to the location indicated.

Exhibit Number Description

3.1(6) Amended and Restated Certificate of Incorporation of VeriFone as amended. 3.2(15) Amended and Restated Bylaws of VeriFone 4.1(2) Specimen Common Stock Certificate; reference is made to Exhibit 3.1. 10.1(1)+ 2002 Securities Purchase Plan. 10.2(1)+ New Founders’ Stock Option Plan 10.3(2)+ Outside Directors’ Stock Option Plan 10.4(4)+ 2005 Employee Equity Incentive Plan 10.5(3)+ Form of Indemnification Agreement 10.6(16)+ Amended and Restated VeriFone Systems, Inc. (formerly, VeriFone Holdings, Inc.) 2006 Equity Incentive Plan 10.7(12)+ Form of Amended and Restated VeriFone Bonus Plan 10.8(5)+ Lipman Electronic Engineering Ltd. 2003 Stock Option Plan 10.9(5)+ Lipman Electronic Engineering Ltd. 2004 Stock Option Plan 10.10(5)+ Lipman Electronic Engineering Ltd. 2004 Share Option Plan 10.11(5)+ Amendment to Lipman Electronic Engineering Ltd. 2004 Share Option Plan 10.12(5)+ Lipman Electronic Engineering Ltd. 2006 Share Incentive Plan 10.13(7) Sale and Purchase Agreement dated November 12, 2011 by and between Point Luxembourg Holding S.À.R.L. and Electronic Transactions Group Limited, as Sellers, and VeriFone Nordic AB, as Purchaser. 10.14(8) Security Agreement, dated as of December 28, 2011, by and among JPMorgan Chase Bank, N.A., in its capacity as the Collateral Agent, and the VeriFone parties. 10.15(8) Pledge Agreement, dated as of December 28, 2011, by and among the VeriFone parties and JPMorgan Chase Bank, N.A., in its capacity as the Collateral Agent. 10.16(8) Guaranty, dated as of December 28, 2011, executed by each of the Guarantors party thereto in favor of JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent. 10.17(9)+ Offer Letter between the Company and Marc E. Rothman 10.18(9) Form of Restricted Stock Unit Award Notice. 10.19(10) Amendment and Restatement Agreement, dated as of July 8, 2014, to the Credit Agreement, among VeriFone Intermediate Holdings, Inc., VeriFone, Inc., the other Loan Parties party thereto, the Lender parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent. 10.20(17)+ Amended and Restated Employment Agreement for Paul Galant, dated as of December 15, 2017

122 2017 10-K Exhibit Number Description 10.21*(11)+ Director Deferred Compensation Plan 10.22(14)+ Executive Severance Policy 10.23(13) Offer letter, dated November 14, 2014, between the Company and Glen Robson 21.1* List of subsidiaries of VeriFone. 23.1* Consent of Independent Registered Public Accounting Firm. 31.1* Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of the Chief Executive Officer and the Chief Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS ** XBRL Instance Document 101.SCH ** XBRL Taxonomy Extension Schema Document 101.CAL ** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF ** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB ** XBRL Taxonomy Extension Label Linkbase Document 101.PRE ** XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith. ** XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. (1) Filed as an exhibit to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed February 23, 2005. (2) Filed as an exhibit to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 18, 2005. (3) Filed as an exhibit to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-121947), filed April 29, 2005. (4) Filed as an exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-124545), filed May 2, 2005. (5) Incorporated by reference in the Registrant’s Registration Statement on Form S-8 (File No. 333-138533), filed November 9, 2006. (6) Filed as an exhibit to the Registrant’s Annual Report on Form 10-K, filed December 21, 2010. (7) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed March 12, 2012. (8) Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed January 4, 2012. (9) Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed February 4, 2013. (10) Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed July 10, 2014. (11) Filed as an exhibit to the Registrant’s Annual Report on Form 10-K, filed December 18, 2015. (12) Filed as an appendix to the Registrant’s Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders, filed February 11, 2016. (13) Filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q, filed March 11, 2016. (14) Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed June 21, 2016. (15) Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed December 20, 2016. (16) Filed as an appendix to the Registrant’s Definitive Proxy Statement for its 2017 Annual Meeting of Stockholders, filed February 9, 2017. (17) Filed as an exhibit to the Registrant’s Current Report on Form 8-K, filed December 15, 2017.

ITEM 16. FORM 10-K SUMMARY None.

2017 10-K 123 SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VERIFONE SYSTEMS, INC.

By: /S/PAUL S. GALANT Paul S. Galant Chief Executive Officer

Date: December 18, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature Title Date

/S/PAUL S. GALANT Chief Executive Officer December 18, 2017 Paul S. Galant (principal executive officer)

/S/MARC E. ROTHMAN Executive Vice President and Chief December 18, 2017 Marc E. Rothman Financial Officer (principal financial and accounting officer)

/S/ROBERT W. ALSPAUGH Director December 18, 2017 Robert W. Alspaugh

/S/KAREN AUSTIN Director December 18, 2017 Karen Austin

/S/ALEX W. HART Chairman of the Board of Directors December 18, 2017 Alex W. Hart

/S/ROBERT B. HENSKE Director December 18, 2017 Robert B. Henske

/S/EITAN RAFF Director December 18, 2017 Eitan Raff

/S/JONATHAN I. SCHWARTZ Director December 18, 2017 Jonathan I. Schwartz

/S/JANE J. THOMPSON Director December 18, 2017 Jane J. Thompson

/S/ROWAN TROLLOPE Director December 18, 2017 Rowan Trollope

124 2017 10-K Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT The chart below lists significant subsidiaries of VeriFone Systems, Inc. as of October 31, 2017.

State or Jurisdiction of Incorporation or Legal Name Organization VeriFone, Inc. Delaware VeriFone Luxembourg S.a.r.l Luxembourg Hypercom Corporation Delaware VeriFone Nordic AB Sweden VeriFone Bermuda Holdings, L.P Singapore Hong Kong Branch of VeriFone Luxembourg S.a.r.L Hong Kong VeriFone Singapore Pte. Ltd. Singapore VeriFone Holding GmbH (formerly known as, Hypercom Holdings GmbH) Germany Point Transaction Systems AB. Sweden Verifone Systems International Ltd Labuan VeriFone GmbH (formerly known as, Hypercom GmbH) Germany Verifone Services UK&Ireland Ltd. (formerly known as, Commidea Ltd.) United Kingdom Point Transaction Systems Oy Denmark Electronic Transaction Group Nordic Holding AB Sweden InterCard AG Germany VeriFone Israel Ltd. Israel Point Transaction Systems SAS France Hypercom France SARL France Point Transaction Systems SAS France Babs Paylink AB (51% owned) Sweden Empresa Brasileira Industrial, Comercial e Servicos Ltd. Brazil VeriFone (U.K.) Limited United Kingdom Point International AS Norway Point Transactions Systems AS Norway VeriFone Systems Australia Pty. Ltd. Australia EFTPOS New Zealand Limited New Zealand Verifone New Zealand New Zealand VeriFone do Brasil Ltda. Brazil Verifone Systems France SAS France VeriFone Media, LLC (formerly known as, Clear Channel Media LLC) Delaware Verifone India Sales Private Limited India VeriFone Africa (Pty) Ltd (formerly known as, Destiny Electronic Commerce Pty Ltd) South Africa VeriFone Australia (HAPL) Pty. Ltd. (formerly known as, Hypercom Australia Pty Ltd) Australia VeriFone Canada, Inc. Canada VeriFone S.A. de C.V. Mexico VeriFone Elektronik ve Danismanlik Ltd. Sti. Turkey VeriFone Argentina Argentina VF Systems Pte Ltd (Taiwan) Taiwan Hypercom Financial Terminals AB (Sweden) Sweden Verifone Thailand Ltd Thailand VeriFone Systems Spain SLU (formerly known as, Lipman Ingenieria Electrica SLU) Spain VeriFone Intermediate Holdings, Inc. Delaware Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements: 1. Registration Statement (Form S-3 No.333-175235) of VeriFone Holdings, Inc., 2. Registration Statement (Form S-8 No.333-217236) pertaining to the VeriFone Systems, Inc. Amended and Restated 2006 Equity Incentive Plan, 3. Registration Statement (Form S-8 No.333-203456) pertaining to the VeriFone Systems, Inc. Amended and Restated 2006 Equity Incentive Plan, 4. Registration Statement (Form S-8 No.333-189994) pertaining to the VeriFone Systems, Inc. Amended and Restated 2006 Equity Incentive Plan, 5. Registration Statement (Form S-8 No.333-176242) pertaining to the VeriFone Systems, Inc. Amended and Restated 2006 Equity Incentive Plan, 6. Registration Statement (Form S-8 No.333-171324) pertaining to the Hypercom Corporation 2010 Equity Incentive Plan, Hypercom Corporation 2000 Broad-Based Stock Incentive Plan, Hypercom Corporation Nonemployee Directors’ Stock Option Plan and Hypercom Corporation Long-Term Incentive Plan, 7. Registration Statement (Form S-8 No.333-154169) pertaining to the VeriFone Systems, Inc. Amended and Restated 2006 Equity Incentive Plan, 8. Registration Statement (Form S-8 No.333-138533) pertaining to the Lipman Electronic Engineering Ltd. 2003 Stock Option Plan, Lipman Electronic Engineering Ltd. 2004 Stock Option Plan, Lipman Electronic Engineering Ltd. 2004 Share Option Plan and Lipman Electronic Engineering Ltd. 2006 Share Incentive Plan, 9. Registration Statement (Form S-8 No.333-132650) pertaining to the VeriFone Holdings, Inc. 2006 Equity Incentive Plan, and 10. Registration Statement (Form S-8 No 333-124545) pertaining to the VeriFone Holdings, Inc. New Founders’ Stock Option Plan, VeriFone Holdings, Inc. Outside Directors’ Stock Option Plan and VeriFone Holdings, Inc. 2005 Employee Equity Incentive Plan; of our reports dated December 18, 2017, with respect to the consolidated financial statements of VeriFone Systems, Inc. and the effectiveness of internal control over financial reporting of VeriFone Systems, Inc. included in this Annual Report (Form 10-K) of VeriFone Systems, Inc. for the year ended October 31, 2017.

/s/ Ernst & Young LLP

San Jose, California December 18, 2017 Exhibit 31.1

CERTIFICATION

I, Paul S. Galant, certify that: 1. I have reviewed this quarterly report on Form 10-K of VeriFone Systems, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By: /s/ Paul S. Galant Paul S. Galant Chief Executive Officer

Date: December 18, 2017 Exhibit 31.2

CERTIFICATION

I, Marc E. Rothman, certify that: 1. I have reviewed this quarterly report on Form 10-K of VeriFone Systems, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By: /s/ Marc E. Rothman Marc E. Rothman Executive Vice President and Chief Financial Officer

Date: December 18, 2017 Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

I, Paul Galant, Chief Executive Officer, and I, Marc Rothman, Chief Financial Officer, each certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the report of VeriFone Systems, Inc. (the “Company”) on Form 10-Q for the quarterly period ended October 31, 2017 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By: /s/ Paul S. Galant Paul S. Galant Chief Executive Officer

By: /s/ Marc E. Rothman Marc E. Rothman Executive Vice President and Chief Financial Officer

Date: December 18, 2017

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document. [THIS PAGE INTENTIONALLY LEFT BLANK] STOCKHOLDER INFORMATION

Common Stock

Verifone’s common stock is listed on the New York Stock Exchange and trades under the ticker symbol “PAY”.

Transfer Agent and Registrar

Questions from registered stockholders of VeriFone Systems, Inc. regarding lost or stolen stock certificates, changes of address and other issues related to registered share ownership should be addressed to:

By Regular Mail: By Overnight Delivery: Computershare Computershare P.O. BOX 30170 211 Quality Circle, Suite 210 College Station, TX 77842 College Station, TX 77845

Phone: 1-877-373-6374 (Toll free) 1-781-575-3400 (Toll) Online: http://www.computershare.com

Company Headquarters

VeriFone Systems, Inc. 88 W. Plumeria Drive San Jose, CA 95134 Phone: 1-408-232-7800

Independent Registered Public Accounting Firm

Ernst & Young LLP San Jose, California

SEC and NYSE Certifications

The certifications by the Chief Executive Officer and Chief Financial Officer of VeriFone Systems, Inc., required under Section 302 of the Sarbanes-Oxley Act of 2002, have been filed as exhibits to Verifone’s 2017 Annual Report on Form 10-K. The most recent annual certification by the Chief Executive Officer, required under section 303A.12(a) of the New York Stock Exchange Listed Company Manual, has been filed with the New York Stock Exchange.

Investor Information and Annual Report on Form 10-K

Copies of Verifone’s 2017 Annual Report on Form 10-K and other information about Verifone, including all of its quarterly earnings releases and financial filings, can be accessed via Verifone’s website at http://www.verifone.com.