By Anne Pallivathuckal 
 

VeriFone Systems Inc. (PAY) reported fiscal second-quarter results that topped its own expectations and the maker of merchant-payment terminals said it would reduce headcount by about 500 by the end of this year.

Shares climbed 3.9% to $35.15 after hours.

VeriFone is seeing greater demand for its terminals that have more secure technology after hackers stole customer data from retailers such as Target Corp. (TGT) and Neiman Marcus Inc. late last year. VeriFone has roughly 70% of the market for payment terminals at large U.S. retailers.

"We are working with our clients to protect their brands and reputations from the growing threat of data breaches," Chief Executive Paul Galant said in a statement.

Galant, a former Citigroup executive who was named to the top post last year, has focused on research and development, realigning its organizational structure and simplifying its product line-up. VeriFone said it expects to reinvest a "substantial" portion of savings from the restructuring to improve its operational infrastructure and growth initiatives. The company has about 5,000 employees worldwide, according to its website.

VeriFone also projected third-quarter adjusted earnings of 33 cents to 34 cents a share on adjusted revenue of $455 million to $460 million. Analysts surveyed by Thomson Reuters expect adjusted earnings of 37 cents a share on revenue of $454 million.

For the quarter ended April 30, the San Jose, Calif., company reported a loss of $23.9 million, or 22 cents a share, compared with a loss of $58.4 million, or 54 cents a share, a year earlier. Excluding items, earnings fell to 37 cents from 42 cents.

Revenue rose 9.4% to $466.4 million. Excluding deferred revenue and other adjustments, the top line came in at $467 million.

In March, VeriFone forecast adjusted earnings of 30 cents to 32 cents a share on adjusted revenue between $440 million to $445 million.

Write to Anne Pallivathuckal at anne.pallivathuckal@wsj.com

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