NATL - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the NCR Atleos Fourth Quarter and Full Year Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brendan Metrano, Vice President of Investor Relations. Please go ahead.

Brendan Metrano

Good morning, and thank you for joining the Atleos 2024 Full Year and Fourth Quarter Earnings Call.

call MacKinnon, Tim COO; the Wamser, CEO; on Stuart CFO; and me today Oliver, are Andy Joining Paul Campbell. this year on start company's for will morning overview an Tim of XXXX. performance this progress and strategic update an and priorities with the follow financial and Andy financial with our review a XXXX of will results outlook. Q&A. move Then to we'll

performance. including include, SEC, of Before we measures, will presentation remind current are materials call in to in the our investor.ncratleos.com. With today's call of results our actual words Relations we our this subject described risks financial review Investor A forward-looking meaning. and and from GAAP which statements, expectations me later its differ those risks as include in to website. reflect described Also, non-GAAP and annual cause to uses Tim. counterparts expressed such to could which non-GAAP turn the today, the our reconciled to our and by uncertainties certain words that and These beliefs are These company get expectations. you periodic started, and expect on uncertainties filings may, statements of These measures materials results be will, will to refer are similar the materially let discussions are will on report. I and our replay that, available today website, presentation over and often will and their that with our measure

Timothy Oliver

everyone Thank morning. us on you, joining this for this to Brendan, thank call you and

have XXXX on progress to story, for stepped for Relations his impossible the January financial I'll XX my Atleos Andy contributions to and of is CEO. Reflecting company He the employees more to of are XXXX almost the year am as results Slide then work engaged include facilitate the financial also the recently reminding as a it late significant Investor overstate Andy the brings personally, our it for to Wamser I'd and reviewing role our my transition on joined Atleos. down banking. from this you in and I team. old years at Paul I'm best Atleos thank Sarbanes-Oxley our role to ensure operational an in and today strategic the both on public closing One to of the and with XXXX hand energized. in, his outlook. team for decades then the in Atleos quarter along role and for continued CFO has finance his yet, from NCR process X. start importantly, and organization. our companies performance CFO pleased to support accomplished. our has morning For first company in CFO new Paul in start the those and company both full with over to me, experience investment previewing Atleos following presentation we'll independent smooth by Andy the to grateful off XXXX what review and year as the who I to like our Campbell, compelling to X roles and and will outlook. website, very

efforts. innovation service to best-in-class the Our customers levels appreciate return and recognize our reinvigorated

think for investors being X are we compelling the of and it trading company proud too for is a see provide ATM-centric low. I story, traded report Equity on and per I the financial calls of particular and Presuming our valuable daily am Our are Atleos publicly to in solid on has results progress for opportunity investor and quarters, many volumes and XXXX all these company's description full impressive Atleos, share outstanding stand-alone was is been every investors. of constituencies, that In nearly a pushing ATM fourth our still our this to an about company year higher, to performance mind focus strategic year the revenue with quick quarter new steady. regard, but and today. Despite

companies, these a service quality, consumer installed growth generating is whether while vectors machines services their ecosystem. comprehensive to the more spin driving of that's NCR by hardware, We While has predictable including that we've pure-play revenue cash more of our independent institution and communities and to record approximately more Atleos in support, enterprise strong installed Since company, network continues undervalued financial leadership improve scale, customers, a every cash-based efficient In own have for providing and of begun environment is or leverageable blue-chip transaction infrastructure from that cash and own service fueled transaction, stable both all customers' and strong a in outsourcing located XX,XXX by steady separating unmatched our across machine around and and world-class. to from now partners employees, customers, the operate base to our are position performance in from outlook their significantly commensurate is and come generation. Atleos relative of into we gains clear strategy, retail translated company from a through our of demonstrate not legacy Atleos is that performance recognized more common a ATMs world, volume our for strategies flow fleet Atleos, compelling ATM remains we our a an more with our our desire a that will financial in networks. clients approximately service building free value. for and in access track transactions peer own the global a financial locations. Both XXX,XXX banking, self-service growth for and has higher

continue cost-effective to increasing. global way, customers' their experience the the devices As improve self-service in of to is banks importance seek most

reinvesting banking are shared utilities. customers their our back into embracing and result, footprint a As retail financial

better in reach quality, higher higher result traffic. broader and this lower consumer costs, strategy foot experience, For them, will

For and flow. revenue growing predictable growth, increase revenue drive cash mix Atleos, it will and scale from both free and richer higher profitability a

to Turning to XXXX corporate that success satisfied transaction, required myopically complex partners. XXXX. Slide of for we be and on quickly a in a completion a XXXX a of establishing trusted was new our X that redirected us engage growth with Atleos. focus XX,XXX allow of and a company to unmitigated nearly the October year employee that focused independent strategic strategy to review separation base After people clear of of completing us be customers for global

from quarter, each services, adjusted for out in of adjusted Margin set the million year-over-year full the cash over mix towards and an that of increased revenue, shift sequentially with XXXX, or For $XXX generated revenue flow, accretive EPS we expanded year and coupled financial across cost $X.X the year. over in the line productivity year. free in benefiting we all accelerated targets initiatives billion $X.XX above

As branches logic utilities for strategy the low-cost ATMs And we outsourcing away is like traditional and authentication cash capable with is Atleos. or capable is bank for like globally. growing or begin XXXX, capability are provide financial accelerating. our tap biometric that operators Demand commercial Banks enhancements being recycling increasingly acknowledging services validated. retailer to more and coverage noncore immediate shared the from demand of ATM

through unanticipated in is a software over service of Moving and opting other globally financial sell outsource necessary to at healthy of primarily service installed were banks ATM increasingly, dissynergies a first XXX,XXX revenue those services more XXX all in inflation or then Sea point coupled of million of revenue. eliminated for line resulted business the expectations. to more repairs base and profitability growth resulted that a software $XXX advantageous indirect the over were the than and year. fourth. shipping results year and initiatives comprised above through Service mix, recurring Slide in productivity, cost are From on with were direct basis of growth time. offset centered Revenue a line institutions in and to support gross mid-single-digit light then pace. like X to business. Banking X we the with growth in slightly savings, drivers others. Full from the ATM-as-a-Service ATMs expansion the maintenance, which split-related savings to disruption. This Red X% primary top financial full margin perspective, and but generate service run and grew quarter over contributed subscription This points expenses XXXX our the Self-Service approximately a Traditionally, the in and

technology, go-to-market the end strategy. and ATMIA recognizing service Atleos past Outstanding commitment to service acknowledged and our of resources and pleased for In quickly leadership quality support excellence began company in to our awarded highs. our multiyear best to were by XXXX, Service committed to execution was improve we're in February Award, Service the service year, Over at to practices. We see the we and considerable XXXX, product externally. levels

effort grew product service the of The strategic more every previewed X%. ATM-as-a-Service support service active and the number revenue services outsourcing XX% an and XX,XXX concept with finished ultimately unique a product overall modify exited that in that the revenue them also priority We software commercialize. of relaunched machines ARR over reactions we reflect generated We in and this full more customers' and comprehensive for then for to than remains world. customers our million. growth top and to year the capturing business machine at and by ATM-as-a-Service innovation the we we XX% devices. with In grew around $XX XXXX year XXXX,

sales backlog robust pipeline that for a well us a have XXXX. and We position

see of institutions services singular ATM-centric range portion to appetite or to provider. continue their outsource across financial of broad all We a the to a

of organization of sped full lower-cost last customers grow. is a some that of piecemeal passed the while and As implementation. onboarding services regions, backlog to and unit up have quality continuum migrate The count continues ATM-as-a-Service ATM very on significant we discussed time. And backlog quarter's that our over the on as opportunity our streamlining large in deals outsourced high can outsourcing see call, has

XXXX For XXXX, ATM-as-a-Service ARR will grow $XXX over XX%, we an over expect we that million. revenue exit with of the will and business

our the the line to results and network consist growth in generally and the new in crypto high-quality new by in basis U.S. international transaction decline than retail quarter of performance new well revenues each high. in our new excluding expectations. segment The and with the banking margin grew This year fourth performed full EBITDA ATM operated ATMs by Network LibertyX. Adjusted business quarter the both business located another setting traditional up markets, Moving quarter geographies. ARPU addition XX,XXX fourth X. points with single-digit and year, segment partnerships, for for in fueled Network banking full above top the with mid-single that retail approximately The the locations. and owned of high in strong is transaction digits on and our transaction Slide blue-chip expanded types utility were more financial XXX generated the in unit, We

quarter other product our for with banking Allpoint as locations. activities. Recently, in our rate offering Our to in Chime. Many commercial appropriate enables annualized branded for to quarter, fourth typically year additional expanded customers customers And in generate profitable Capital of Credit in transactions that completed proposition bank possible needs, regular value Federal We such Navy during nearly grew range to and resonate in partnership conduct of we $X in follow-on and at is cash transactions upgraded a run more relationships our with display deposits. than agreement growth in a low-fee digits almost top expanded machines. to year fourth retail that their to are the both retail network billion issuers at us looking now cash in the retail full technologies XXX% transaction-driving branding discussion the direct conduct and in deposit Allpoint Chime as partnership deposits Deposit XXXX. customers their new managers, surcharge-free headquartered and and more see ReadyCode This the with continued distribution XX locations to transactions including locations. that invested many One, Midwest several an Lyft. program and their to continue of banking brand that our enable programs Allpoint safe double growth key for key with ATMs we Plus transactions see a at cardless, finished our resulted of such Union our we're channels X,XXX partners. as to and pharmacy broadest the and convenient, We our us the them executed the have ReadyCode partners by make with transactions significant comprehensive the PNC partners accountless, the will consumer. We

company attributable alignment. plans Part ago, appropriately success. Turning primary X their that success laid to in to communicated our similar top-level that goals success. of again XXXX. to X every align company's year out Slide for In objectives employee and discuss allow of our brought were to new our allow with XXXX A we we objectives XXXX, should is that continuity our in have thought similar and alignment to

The still operating constrained require efficiently. somewhat sheet first by balance growth capital expense. is of grow allocation will while and judicious to we're Accelerating growth our

We will the emphasize cash that and growth margin to rate are returns vectors more immediate drive and generation. those accretive

products regions reemphasize that sets or to are or less We customer profitable others. to will also even allow deemphasize some us

our makes margins. ecosystem. Service culture. to base in develop higher We a differentiating a ATM about revenue and factor half the to already of industry cash is service, key second carries service-first the The is believe product, up and not in

plan and revenue a that As to wallet through and finally, more our employees' our always-on of outsourced business service as life from make make unnecessary dynamic. achieved long-term our and The Gaining to market through make former of we out, our us inefficient. simplicity. nimble, growth do can will processes part service us essential of excellence our NCR jobs legacy people, embrace we will customer easier only trust rewarding will our overall the more systems customer Investment much plays is complexity our be with. requires in services A customer inherited opportunities success. And is XX/X share strategic and the service mindset performance. leading sustained that outpace deep

Our operations well. simple need strategy and our be as to is

XXXX. Andy, to positive work, continuous XX,XXX Atleos a diligent customer a to delivering want focus over hand members team success first their full improvement, I thank I Before through to the and for on great their you dedication year that, Andy, of you bar XXXX, higher, Thank challenge over does and an to The accepting bright. With you. future the collaborative you thank better for did disposition. all but in the get for even is

R. Wamser

for Tim. Reinforcing we an XXXX you, as comments, Atleos some strong in was year another of positioned year well Tim's Thank for outstanding XXXX. are

We delivered and as consecutive as operational We results are we delivered exceeded year. goals set to started our public results quarters and it's each sequentially results company's or throughout being improved have that the first company. to strategy encouraging year Moreover, a delivering of see pleased in financial X met ambitious year that solid either as the expectations quarter. we and move financial validated the

year XXXX, $X.X full was grew total on X%. a underlying company comparable billion and growth For year-over-year of revenue X% reported basis with around

the flow-through effective businesses growth line $XXX top global grew reflecting generate execution top X% driving that healthy ability net was Our the reflect digits savings. from highlights predictable, and trends of the our EBITDA line revenue and business flow. Overall, in mix from software solid growth year-over-year, of productivity great grew to adjusted to strong and strategy, revenues. impressive drive services service-oriented led favorable recurring revenue an base. million free our incremental XX% increased XXXX to and cash and installed recurring growth, mid-single in returns X% mix our streams revenue and The

external we year. progressed as deliver growth course overcame initiatives headwinds. with of of at XXX productivity drove Looking corporate split, segments, growth. higher-margin able impressive and were points dissynergies reporting that XX.X% XX points higher margin and the the EBITDA more year EBITDA basis from we Self-Service lower with over even cost the XXXX year. costs business the the labor throughout is the costs margin coupled prior margin the increased and What Banking is the was expanded to lines, other that in Adjusted for improvement most from basis We

was year and XX the split. the debt year The due Fully which adjusted tax benefits effective was NCR expense legacy full of with $XXX count to prior million million. than related average the XX%, Moving our raised below to was one-time because the interest rate not was to discrete better diluted comparable spin. expected share was fourth is quarter in line, XXXX the

exceeded also our in free together, of earnings primarily due effective million diluted guidance management. $XXX taxes, So pieces of free well putting was $X.XX, generated impressive flow a and million. cash share $XXX flow cash timing was working $X.XX. We in capital cash of adjusted an approximately Upside of the our above the which per which fully XXXX, guidance lower tax was to rate meaningfully

fully progress most to Turning message how here how was don't should services in we factor its lines. year. a in The focused results core the both key generated this and this into highlight just Slide revenue XX. Ultimately, just creation. key value well solid the business has key we that in to growth Atleos our businesses, the is Overall our Across will underlying are and strategy Extrapolating performance to profile. for fundamentals effective enhance key of profit represent future, continue been be on. execution shareholder the

Total review or XX a constant Moving a our core Slide was year-over-year currency for approximately X% on quarter to basis. fourth company X% was $X.X which of up billion, revenue results.

year-over-year. margin for direct to and ability with indirect growing and Network the Our of of service core similar Adjusted services to Banking grew This of due for mix top operating a in expanded XX% revenues. $XXX million EBITDA leverage year-over-year savings. From growth mid-single reflects growth. accounted and net favorable business most and productivity was our the combined Self-Service and basis was software perspective, led recurring productivity businesses, and segment strong business drive grew businesses, XX.X% lines our line line and points a costs. core to in EBITDA digits growth savings XXX notable

tax by driven better-than-expected to quarter $X.XX was the profits prior exceeded adjusted XX% per and up XX. lower than Fourth diluted share earnings expectations effective an Moving rate year. and to Slide year-over-year

the chart the on right. to Moving

free is cash generated of combination even to fourth the our the fourth due an capital During quarter, better year strong cash of highest we when was we had free typically The of management but million and flow. quarter working timing the cash flow impressive of generate we taxes. the this year, $XXX expected than profits,

X software our Starting year-over-year growth had Self-Service growth outstanding Slide in revenue to quarter primary for high-margin exceeding off fourth by software expectations. Moving $XXX was XXXX, million increased productivity $XXX XX% margin driver XX% and focus upper a The expense year in an XX. X% which capped with results million. and while to Banking The in QX, in offset driving the revenue first to software margins continue Adjusted left, points basis led strong grew in the ATM-as-a-Service. progressive expanded quarters. We initiatives. to on or over basis in right our to revenue and by the This to partially EBITDA hardware and associated increase services shift as improvements our points QX. growth with business QX higher-margin bank illustrates XX through services QX solutions outsourcing reached on deferral XXX adjusted over from initiatives. chart cost the we EBITDA solutions, sequentially top continuous lines,

Our margin grow revenue. adjusted than trends faster EBITDA continue materially to

the our was positive revenue and XX% reflecting mix Moving bottom remained from XX%, up the year-over-year, quarter. build of in KPIs services existing recurring of installed slide, basis The a base. revenue fourth to in trajectory the ARR points software year-over-year. the up on approximately was continued XXX

XX. Slide to Moving

slide, to help operational track resulting better XX a and our As present a count But resides from metrics year-over-year and had reminder, increase grew $XX strong into within Outsourcing XXXX, in the progress. markets. Self-Service expansion in it's understand in fourth a customer the business and strategic Banking the key new of XX% customers million conversion company, in investors our XX% to revenue priority to top segment. we left the bank interest quarter. We for our Referring separately Bank Solutions

generate margin which able in fourth XX%. the you $XX.X On we translated profit, were see of that the gross can XX% quarter, increased strong right, to million and year-over-year gross to to

bank margins Importantly, have total margins. been outsourcing accretive company to

fourth slide, move in the of continued quarter. to the direction bottom right the to Moving in the also KPIs

momentum million. ARR $XXX to in quarter over fourth the and left, its sequential XX% was continued the up On year-over-year

of high On was is over the revenue. up takeaway here and driving services incremental ARPU the $X,XXX see ARPU a of X% bank ramp new of right, The outsourcing fourth bottom XXXX of up as that quarter that expected, $X,XXX. is you the continue service can economics quarter fourth to for

$XX,XXX, Looking ARPU the year, should XXXX. which at of the was the backlog continued help average ARPU over the growth at support to end in

business forward-looking most evolves, revenue model will think As on that the relevant Tim our how so view. today, business we the growth KPIs. noted, as will relevant we Based the is metric, is and frame

Network primarily our quarter basis. Revenue in of reported performance. ATM to Liberty was on withdrawal segment and international. million, and FX the America, led Network cycling against approximately accelerate XXX% Crypto decrease XX% was North in $XXX network was continued from segment offset and XXXX. by sequentially. down year-over-year ASDA U.K. international noise launch. turned out core comps volumes in X% Deposit growth in fundamental last on transaction a The fourth to year XX. year's the quarter to headwinds by Filtering business, Moving in The grew solid X% quarter X% year-over-year another for due Fourth around revenue underlying is with Slide year-over-year a partially prior growth revenue grew associated which X% business decrease challenging transactions

with again from seeing sequentially, we our up increased small are for but ReadyCode base. cases a Additionally, volumes product XX% use

of Adjusted and more XX% through target the and year-over-year end was high upper of processing XX% Adjusted fleet the range illustrating at transactions to the right, of Moving ATMs. significant EBITDA was EBITDA of our operating $XXX and at strong operated sequentially. owned leverage exceptionally million margin XX%, grew our

last XX-month larger-than-expected per in was year-over-year of In X% up the accrual metrics fourth the the chart slide addition, the key a bottom highlight margin average our quarter. in adjustment the our left unit of elements revenue on benefited strategy. shows quarter. at The The from

This where impact as a customers quarter The lower where negligible units. on approximately pharmacy our nearby you finished locations revenue is in to usually due visit portfolio slight units. right, unit at had XX,XXX have which count also ATM we is the we stores, decrease transactions. On our partners volume closing has can the have see low-performing

hit in base. volumes transaction continue highs the unit despite earlier, discussed modest As to our all-time reduction

of units both investors to We provides and A assess expect highlight ATM retail product-centric trending and new slide. XXXX XX the the company. the results model on of network this addition a through of to number help increase of geographies. Slide to couple partners in view points

primarily First, refresh with company associated is rather revenue cyclical services-oriented company sales how a a recurring a Atleos hardware model cycles. with than with

Second, our is strategy working.

Our profit. and momentum have revenue respect to services, software transactional solid businesses with both and

As operations and a represent NCR legacy Voyix Voyix. the NCR Voyix geographies exited reminder, other and commercial Atleos agreements between

results We free a these attention at operations. On and financial expect worth business of present to we couple decline of calling continue reconciliation a There flow of are XX, noncore to. items Slide in to a cash position year-end. XXXX snapshot our

First, cash Due recent expense of XXXX less cash of to burden expense. $XXX a be free interest refinancing, headwind included a interest the cash of in flow million our should impressive XXXX. higher October flow

Second, the we progress throughout on our significant year. leverage net made

and turn ended X.Xx year at reduced the end XXXX. X.X from X.Xx at leverage by the of net Our

priorities, and reduction outlook capital we will leverage out we in as we Given XXXX. believe financial our close similar allocation net a have

XX financial outlook. Slide Turning XXXX our to and

we through down Other rate year businesses FX pressure reported just performance and with results underlying like some business this headwinds, the XXXX. wind face Our the Reported year do momentum, segment. strong cycling will for the began positive in of be Voyix-related and expect results on notably

on the X% year, grow X% to expect revenues, segment We the will full to constant forecast Voyix-related X% with and revenue basis. currently which we currency currency on EBITDA a constant core basis. Starting headwind. Our a will be other guidance commentary exclude be currency a

X% expected peers expect again that to with headwind. company lower our X% X% This a methodology we've consistent basis, is calculating fundamental Note by other XX% Total a income currency We for expense. headwind. in exclude and revenue should constant and updated used EBITDA. non grow with in EBITDA having to on most FX EBITDA in to a the XXXX volatility to X% company X% about result with methodology on our beginning FX of adjusted constant currency total will is a basis, grow

rather be a As XXXX new the EBITDA $XXX would base than under million. result, adjusted million our $XXX methodology

XX% $X.XX. the expect grow to diluted be We earnings share will fully and of XX% in per $X.XX to range

cash between Banking approximately full $XXX interest incorporated our free be expect XX% include $XXX flow guidance million We Below-the-line of year constant of be of million. approximately will approximately million digits a XX grow currency on tax into revenue rate diluted expense, to segment is level, $XXX Self-Service and around assumptions basis. to count effective to headwind fully revenue. Currency X% the mid-single million. At a expect expected share we to

EBITDA to be a We FX growth. a should basis. will to constant X% expected to XX% XX% on expect adjusted is currency the year-over-year EBITDA headwind in grow Margins mid-XXs. be expand and

currency the For X% to we business, digits expect mid-single is revenue in FX growth the Network to constant to a be on basis. low expected growth. be a headwind to

approximately higher to is rate approximately from environment. T&T $X should lower X the a of resulting expected were up approximately XX%. due flat to EBITDA X much million. $XX revenue of years year-over-year. to be flat to down EBITDA interest costs $XX in We is with hedges between expiration EBITDA decrease vault to margin during margin that cash million be costs is expect of revenue with adjusted implemented The be expected Corporate EBITDA slightly. Voyix-related million to ago

For the down segment. flat revenue on reported be first year due Voyix-related the we is quarter expect which revenues, the of the related, company other to XXXX, prior comparison of Voyix basis. Total to expected for constant digits currency mid-single exclude to a cycling core essentially be

to share, $X.XX midpoint. million, approximately XXXX would $XX QX is revenue Voyix-related it XX% Adjusted As $XXX EPS around to approximately midpoint. at to $XX at EBITDA be Adjusted of X% growth the $XXX expect be which would we year-over-year a million represent million represent in and would year-over-year million, context, XXXX. had $X.XX which also projected growth in QX to per the

first will due cash free quarter working to expect flow the negative be We in capital. modestly

For context, hardware, quarter those in have a invest QX second robust in to during fulfill we inventory order to orders. have book and we'll

incorporated expense, assumptions fully the of positive our in the share $XX to million generate count interest each XX in quarters of cash X XXs in flow free million. of expect rate tax Below-the-line diluted XXXX. low last and effective We guidance include of approximately

potential earnings to have tariffs. that been about with the thus asked tariffs. limited Lastly, what exposure season, which we of is has this impacts impact business, international throughout far our companies Mexico, have operations been Based implemented on

We implementing that spare which and to inventory Mexico, in the very in exposure. we operation have are a reduce of building small process includes parts plans,

permutations global complex, to relations trade potential impossible are very that, nearly it's Beyond of the and predict geopolitical tariff and time. this at

our financial Slide developments risks and in consistently XXXX. solutions. Concluding year XX, meeting successful the had performance throughout are delivered a comments my We Atleos assessing and highly year, full potential or impressive monitoring We continuously financial targets, first enhancing our year financial is with relationships position customers, profile. flow cash significant generating operationally, free We capabilities, in setting strong exceeding the competitive which another and for improving stage well executed our XXXX. on and

our that, progress operator. shareholders very opportunity I'll these outsourcing about great putting create turn made we optimistic we XXXX path it in see the accomplishments, value in realize the for our on Importantly, we over strategy, Reflecting to are growth ecosystem. our and opportunity on us tremendous on to to a the bank cash for beyond. With

Operator

with first [Operator from you. Instructions] question Summerville Thank take We'll Matt D.A. our Davidson.

Matt Summerville

Two questions. quick and Andy. Thank welcome, you

that First, can referenced number. $XX,XXX backlog? the last ARPU basis. as-a-service of in I quarter, about sort unit now I on was And something $XX,XXX a north thought per you the talk you think of number a

I shift few And there? out of trends follow-up. a next the talk quarters? base then have $XX,XXX, then about off how of, the that So maybe looking over can a quarter-on-quarter say, you And

Timothy Oliver

Yes.

of backlog. I yes, the in devices, fourth that aggregate for can $XX,XXX the that said you was $XX,XXX or average quarter the ARPU step-up business. the We in some think ARPU and in -- see So, we those implemented for in

high some from translated production. a units us It from big a into in backlog you we quarter, ARPU know, as quarter. X,XXX So was getting machines singular about

machines some So revenue little and places other in backlog those profitability shift and the that moved nicely the currently mix and high-margin mix India the slightly of bit is quarter. the in -- of pretty needle still The the lower. both a where of it toward has

across regard, we think be $X,XXX device. any caused average we year backlog change. year current across that the the So geographic induct that in units the it's number into that the accretive the within really to ARPU the distribution will a of that But

Matt Summerville

do Perfect. globe, but then the of side. a prepared demand Can as-a-service some just seeing inbound walk offering? speak, just pretty your maybe on for follow-up, what hardware, in you're in of you'd from your you little as only not a geographic mentioned seeing a hardware terms a around remarks to the bit demand trend, And nice so

Timothy Oliver

Yes.

really nice India clients traction in business. generate traction those have offering -- more has is as in ATM-as-a-Service U.S. a place some Europe We're XXX some for been So us, particularly that the for seeing we're it's go-to you the that in Western the or way as-a-service where now pick-up. seeing already adopted been right great around great that and revenue, less. machines countries

go to U.S. few are that tickets You at There a can This time. had a see big the we of is a lot likely ATM-as-a-Service. in of small-ish a to wins. machines aren't lot

participating or we be think at before. So, as X another introduce been start that think talked to product this markets that the countries XX same markets into I likely could goes, successful elsewhere. in we've a far least as ATM-as-a-Service, the product year, we world ATM-as-a-Service as we X and you're with new to lot about us We've roll see in out

revenue for now product that's helpful. improved goes, of the customers, more it's expensive when the and devices. Europe it's for everywhere, that's markets biggest being are the quickly as -- us, recycler big U.S. hardware far and incredibly those our Western U.S. We've U.S. though by since some got particularly very it a market comes us, adopted for are As our to much ready

a know, bit there, that but in late were back you'll little we're game. we Matt, As

helpful I hardware going a XXXX there's associated think very that's -- to revenue. to kind think you've with got hardware that's wave pull be the forward as refresh, And currently. I refresh we've talked of before, the about modest place wave taking of just

years. But America. Europe more and a not as undertaking aging are over those It's it's us, North obviously, that's think going And now XXXX off. machines I for we're to as it's out play global though, -- several XXXX. pronounced,

should And little see lift even a of us where will give some as years switching ATM-as-a-Service pretty that next about maybe they be some -- so good to to we'll maybe think course, opportunity to year, go. our we'll of bit customers we to hardware And hardware. this and XXXX see talk

Operator

move from Goldman Sachs. We'll next Tong question to George our with

Keen Fai Tong

the by end us how Can of remind you you units had and many latest expectations the are ATM-as-a-Service what your quarter? And for beyond? XXXX

Timothy Oliver

at quarter. XX,XXX of the of think the at about the fourth we're units third end XX,XXX end from the was I quarter. at Yes, up That

So for short of fourth year, then set XX,XXX we onboarding implementation. And course, a bit talked about being the our to with readiness and a really loaded did, the perspective. get we for try lot to from back-end full a year do an but readiness That of quarter. to our we terms to out in this little good had us a customers' of

metric, more all any as not created just because our North equal longer than are units far far profitability India. a we are units in use as As units instance, to America, about, going that that forward incremental and units accretive guiding as we're KPI not to going in for both on revenue talked and

units north at think today. units. rounding we'll about XX,XXX to ] talk I if X,XXX at exit business backlog, well this will ARR will in from million that -- rather I importantly, million we'll -- $XXX [ north be than think said, That about business $XXX revenue units think I So the currently the got growth XX,XXX it units. year be we've And in in of

Keen Fai Tong

much talk go managed then longer process units to of And business, in of Got rationalization stores. down your went about because Network how Can on of it. you this expect the number the for? low-performing you rationalization

Timothy Oliver

good They with constant very Yes, of customers very watching are contact ours. These we don't We're know. keep it us. carefully. in pharmacies

Walgreens, of us folks. particularly probably there's a for good Walgreens The announced anyways. is in think, rumors store, see wasn't shut down I transaction these machine or You they it's last tied night. performing well that when news a for very We're a last with transaction

underperforming the elsewhere. on for street, And the it's probably if so corner. pick around them, transaction devices we underperforming the it's just up And volumes for machine us. We across move that

We system. So to tend a lose the lose we don't on revenue. node just

XXXX that or back which X,XXX essence, get will, in in to we where deals that us X,XXX add to sign count, we'll were. units think I

unless this bit. in know time, going in it's other that a midpoint and fundamentally, as XX,XXX world, nearby, are back may parts the some don't number But units underperforming have we about more drugstores to that add probably it. perturbate close. of over as time. that up. long I back So machine fleets new we're look that so I But around not we to geographies they're over how for that But sizable get going and come wins I'm 'XX many allow a to concerned

Operator

take Dominick Gabriele our next from question We'll Point. Compass with

Dominick Gabriele

profitable towards still? America still higher for mixing little the that's the on shifting focusing question might India, and focused that in just focusing you and guess be versus you've the North about think I backlog are for sold. of call of the ATM-as-a-Service some a you ARPU -- just the this comments you versus general America Europe made discussed revenue-generating in on If bit be India these strategy is towards suggesting might because India that machines just you've on North higher what Europe units just,

Timothy Oliver

No.

both over lot. us markets said, So good I'm emphasizing They're other. one scale a not for I might have matters the and

over great in India, have machines in scale We India. XXX,XXX

very a where different point is like for parts preserve strong emerge. to grow I is it. of And about world move ATM-as-a-Service and us. base very Brazil, a didn't want that talk good Argentina, I price perhaps installed networks stay toward the It market. also it's are market will So That starting There the to market. a are and good

towards there. for North the be beneficial in Europe, will revenue it or when mix when It's more gain talk we compete us or will about America profitability, just incremental We the in I shift But period. idea to of the only to that hope parts create somehow markets. world. self opportunity larger, those the we're There's relegate developed going I real more didn't our other that in more

we opportunity and down were in there's fact, us just America for huge Latin In there.

in installed the player leverageable. and largest we're that have base So is Brazil very an

less instance, North in we be a service somewhat there, strategy than be device So America. and too, that the will somewhat expensive lower will for experienced, need we cost

some all results reported them like needle we the than but move more others. same, little for So, our a the bit

Dominick Gabriele

Right, on expectations was right. like And profit quarter. I versus, in beat a really versus said, then our margins gross there the expectations our nice

You're revenue, while headwind showing absorbing still on EBITDA. the pretty X% FX effectively good adjusted

profit moving in sort Or -- seasonality? of up expect quarter's you I as from level you off right guess, profit the is margin in and the jumping quite margin And the do year? variability down for start the some to so the gross quarter-to-quarter quarter-to-quarter think to significantly be XXXX gross point do fourth we due

Timothy Oliver

Yes.

have have X units. Network into The we X, is EBITDA the year said So were units. more in X Qs see outputs we more in their you're has a year to they last the and aggregate the Our describing. you'll so that very seasonal and more with natural business and and the level got business X year margin curve very nice We've produce right? this gross profit of that generate grows we Qs hardware exit strong unit business. cost We big as profitable leverage across rates going business about to on our business, do XX%, a translates -- as

see you'll higher so And their would there. be profit

calendarization seasonality will the out or play XXXX. of regular our So in regular business again

in the associated I lack appears hit year more of a earlier Voyix gross on -- more revenues think we on in of rate. perturbation a of the the margin that reported profitability FX the headwind and first the year. profitability, half the The will be describe in any the of the have to Voyix, with

curve year. the year profit rate like think much accumulate year, I the the to EBITDA this gross of also and and you so, next see be year margin this And rate for similar margin margin rate shape very across should

Dominick Gabriele

I appreciate. really

Timothy Oliver

]. and to Andy, hello saying [ is too everybody Really want him I talk

Operator

move We'll with from question Shlomo Stifel. next [Operator to Rosenbaum Instructions] our

Shlomo Rosenbaum

Hey, Tim, in ATM-as-a-Service the like units focus on because of I it's to understand more you're a going continuum. not

starting to words, might you're the So less outsourcing outsourcing might that to about continuum? the where talk terms them relevant. moving the get that you But take up in over some of be it's had taking have of more So you of customers services could the customers success services. in year other

Timothy Oliver

ATM-as-a-Service cash that have transit as ATM would the much the associated into have everything Yes. us. inclusive who a asking it. of we with definition Thanks ATM-as-a-Service every And associated used space That's the jumped with to helpful others have a question that term. monolithic, obviously broad of in to of holistic service and term for outsourcing for. defined subcontract We less

up as Of XX,XXX our that We services, definition others last of very have about as I from And devices ATM-as-a-Service. moving -- into tight what managed many XX,XXX are year, in many currently those ATM-as-a-Service. is managed services an describing that's step. describe think obvious call of saw into machines, very moving -- similar up those we machines which to we and we customers

device devices X into traditional think into And ATM-as-a-Service. to those XXXX software the those in on, so folks aggregate are when proportion a move managed who are rest and to beyond, services there's we grow for huge success a I of to who those business I subset think over of and services that up and likely into efficient our the and customers in X-year it's very full subscription to outsourcing the currently time. I hardware moving services now managed cost with customers about take a in area life self only them buy of over break-fix have in the they'd what proven and driving think the the taking asking we'll service agreement effective them of services them be also and that us like in very agreement

and likely our portfolio maybe a X about managed talking we're service little start so bit to talking And together. the about

of customer see the continuum. through migration you can this that So up

what's the and then services it doing at for path some the and full post success conferences, get midpoint to in outsourced we that take we more obvious But again of add the of of it's traditional then customers from and full to managed ATM-as-a-Service. you and our one the point importantly, to I to ATM-as-a-Service. that yes, a managed on had think can to we chart one services kind describes added what

Shlomo Rosenbaum

I I for Got a it. questions have Andy. guess, couple, Then

I'm changed trying or there? new the understand the EBITDA of First, can stripped the to being it what's over you out just EBITDA movements calculation? Is back FX? what's to just describe from for what's being added

Timothy Oliver

Sure.

would with So to associated be look excluding EBITDA, the as we our I'd forward. going be at old this it pension I would to methodology, income and we quarter. the in by going to I going say, But degree, look expense remove would doing a have, then volatility say, other then would think and FX definition, our, we a new it's bank fees. volatility some be and that key at mean one are we

could this guidance the and And of associated volatility will given million we be and think some then the quarter, million magnitude to so $X remove a order in of $XX in result. our with aggregate

Shlomo Rosenbaum

gross about Okay. And should then expense interest could into you in comment flowing and a little how we Vault that change the cash think bit about margin?

R. Wamser

Sure.

much would and of cash, Vault rent select rate at of fairly we place about favorable look lower directionally ago, X put years or in we lock we of terms I'll environment. we're in rates that bank we you in a get cash lot from in a lot that cash to When billion able happened, say, in partners. $X a X say how let's terms for what hedges aggressive have or -- So

some were when So layered that look in. I those at of hedges

some of half what's then of then XXXX to that happening off the as we is And in back get hedges. favorable those so we're the rolling year,

within going of be is to mean COGS it's just close would EBITDA I segment, would that that thing that around in XX%. while year-over-year in some said, margin still, So The the I be the to really terms say, key I'll is our is to there what's pressure Network. emphasize, driver happening I is XX%. though,

So great bulk it's for hedges still we a some be of are the lapping impact of but going business, to cash.

Timothy Oliver

to we around and a our when at a model as we here that of Yes. our sold described Andy the did committed wasn't model to Board good the we model to billion of But that time. to Cardtronics. the a billion Board acquisition. of out or amount acquisition profitability time, bulk acquisition, place be in $X has the significant good at and cash by that turned putting it hedged $X But a swaps around

we're off, market rates. roll those paying As now

at we'll of company rates the interest some relief And performing what rates. time so what But we've interest at were were now margins in seeing essence, the a hopeful very relief -- margins see us differently, see very, rates very, they in hit which now several good you're productivity margin approaching with the was some years new market is across very of those network low the the our allowed to the similar absorb news rates. we'll has all are and some are us is going to I'm it last rates business which and the in the period to, to in profitability rates generated or say point, acquisition, prior in in that that our at with highest XX%. over from market the

Shlomo Rosenbaum

lot. squeeze taken Could that. Great. you you're a of in I've kind one with more, if okay

Timothy Oliver

Yes, yes.

Shlomo Rosenbaum

customers on working to doing business? really it are internally a guys of order are There that. that's in Is that stuff ATM-as-a-Service something that that in you just Or their of going while stuff still for the of not ago accelerate like what and financing little ATM-as-a-Service own really we're was being light that's really on some because to of part on? the is third-party a talk terms hardware of focused kind kind that

Timothy Oliver

both that -- your exists. sides still question. We answer opportunity still the of just is yes. So actually It

ago, built time require the It's of We XX% our it's the that sheet. had deals thought ATM-as-a-Service balance XX% we that hardware. have the would to thought XX% Paul maybe of and been. seen transactions of on reciprocal We've model that. time at hardware -- intensive we more new did capital And or been we new this much a than when be I long closer required actually

and And type shown so preference of a we've for those -- transactions.

So also I'll for yet we elaborate of use we It ground. what has Paul capital. let nonrecourse off they maybe opportunities some worked still to fleets devices We've off-balance to less Andy for financing not had place. might hard true, But that the sense. those get be. deals big really are looking some enough have seen though, make of put far in is devices sheet that

R. Wamser

That a Yes. that. great introduction was to

find So and that would fully will second into off plan what a certainly that. absolute solution we quarter, to us to that sheet, to able in us. an for but our that as I And I say that's expect -- move it's the focus financed would and expect key work will balance do be we be is

Operator

We'll Senyek Chris with move Research. to Wolfe next our from question

Christopher Senyek

level how at want the which a broader debt perhaps and something, maybe at we're thinking ask because about is than I implementing but here. it mention otherwise I to of are plan concerns capital currently stock allocation buyback guys macro is the know you'd paydowns a trading near-term with anticipated? sooner you considering priority, the

Timothy Oliver

announcing earnings that seem figure love to out into quarter. hasn't every do It I I weak markets. Yes, to changed. how

clamor investors equity the changed start that share I to overall for in at to the market bit think leverage, being discussion little a more investors for through hurdle for in point, rate returned somewhat thing -- bit. point moved the down and has a your to our think little only maybe which this a them that's with cash we is repurchase

Xx should the our those about we leverage. obvious. getting reduce X we back translate When in maybe that Once of gross, change Xx multiple We get with than meaning the think below very our about we Xx. We to down our lot that it equity some dollar holders. whether holders leverage, least that analysis share leverage gross Xx up At that we what we -- in reduce have you under we to companies a above there, of Xx every debate will to -- and certain that holistically year. that net meaning think those if traded almost about talked point some that free would to have we'll those we've significant So until to -- continue flow. flow it's fact, and incremental more the good higher gross we cash full have at and you get those deliver at net this of leverage. should generate investors there free say Xx debt. with demonstrate think apply valuation, with the trade That we a focus get stocks extent to to pick trade Xx, gross between get a cash and of do a debt your which on I to time, point investors that midpoint uniform, cash we, some debt start start be I have talking our upside next dollar Board in to or don't shareholders Xx a I either our about think

So changed to down to of calendarization in of changed getting nothing get in has Nothing there. terms Xx. wanting has our

get the we'll think there I midpoint by the of year.

that and yet year. with we buying But we think we and become if amongst get we all more I cheap, midpoint can, desire investors of agree Board our the I -- for there you apparent, even at too should lower our the with back. leverage stock when some is you, we'll be the should and has debate

Christopher Senyek

one then more And question, Yes. of strategic. kind longer-term

out, stock long-term show recurring years? couple a to argument get when you'd over in kind on the it given objectives recurring as revenue the multiple different of customers the next has revenue the you went road terms the for and -- percentage get of In preference the of were had that you you and revenue changed did today? higher spun recurring just the outlook What's any was for of up. where the And

Timothy Oliver

Yes.

revenue bit recurring We're pretty a tracking behind. Our to performance close where thought. is little we

years and revenue, be our behind back rate -- a total have But that the ATM-as-a-Service in adoption And as transaction we've remember, bit models. models a model count of And growth revenues a to the total onboard levels you'll be value old as in ability our X.X, our are X we not of and If growing our it's a recurring, -- which the too. our percentage from total those folks, every you causes little a to the a much to services talked belief service that on will service volumes we our lag about revenue that now, behind model, higher bit was which to well. we're to ultimately, the count outset. we the little transaction those change customer go as the

and is recurring from coming model, still think laid cash we've perfectly of free be out in flow of that line all revenue which most X with, to that So I the metrics that percentage in think X-year I sources. likely there's we're

Operator

question, For Point. we'll our Gabriele return next Dominick to Compass with

Dominick Gabriele

And on ramp right sustainability in that to about that as thinking cash cash are how targets pulls you of up almost just recently. the XXXX flow flow in right, kind ended outlook I where the flow a cash that targets? you were gave with year-over-year your I out targets that not about given more But of the the XXXX growth. curious as hit point, of was about free be updated Actually, more in to XXXX overall, mentioned think like long-term kind do flow with flow and of quarter know forward, nice that the far pull going the adjusted. free you it's we free cash linear how in given you cash million How $XXX free free particular?

Timothy Oliver

Yes.

we the so into quarter. have levers and fourth in much pull So so it flow many wasn't forward cash a

got that will this that quarter. accrued paid some taxes we had we some in changes 'XX on So in a and costs break legislation based on get

manage pull free so flow, capital can You levers forward. only was There's it right? So many in so much a better. working cash

of to out fall grow extrapolate that and down amortization about longer-term that can most over next years of kind depreciation you through year, know can can down. several the presume XX% free of and or should have cash extrapolate going CapEx We that can profitability out You we're growing I at tax to you grow to tax you goals the profitability. and EBITDA flow. a rates coming cash rates that X% and talked underruns

it's year. overdrives In the for year going yet overdrive was one again an model and fact, against to the be this next us, of that

-- down, for us. expense expense drive better lot isn't it that our of interest our tax in Our ability deductible large generate And or of more Any yet make to it's more come should interest deductible to every tax a that cash law profitability. it and expense to and is a interest our huge flows. will because how relative relief relative profitability

think thought can I So are flow approaching do there we just number talked XXXX. million pull we $XXX I cash several when we'd levers mean, million that of we in only across a $XXX free time. But yes, about

in holding XXXX, by still that on end $XX high of over having we're million. to Now driven range of $XXX the even million about

we that cash than free flow doing So we are on a we job better might. thought

an a We bit hardware, hardware as a working in little the we in pretty in $XX year our ramp part have ramp use million will X to first about Qs for of this of capital X. significant cash

quarter. You quarter, just have to -- the so little there's year that quarter water the end got to to stuff that really the and of year's in sure expect that well a happen to collect I of we've fully get this bit again collect first of the fourth last fourth you make at but in less really, on get did done. We

flow as over will So growth you'd pretty Free exactly growth if right. thinking for outpace will about years. business be flow cash fastest-growing several outpace, the free EPS in years, this EBITDA next being the several you're metric next the growth handily cash

Operator

questions the to at for or are conference any It this over back turn closing further like I'd there no additional appears time. remarks.

Timothy Oliver

today. Great. Thank of listening, Thanks year. remarkable you completed for everybody are, that. just I And expect pretty paying my thanks and them a welcome thank employees look, attention Andy, Paul, for again. are many we if you.

killed it. You

More to who tell forward. I I it. a that step is this are up well. challenge we right you'll of job. great a all We should did as long suspect you a story. hearing good know You appreciate investors going expect lot friends, people and those your be

and much, So XX in thanks you days. very to talk we'll

Operator

again you Thank for call. your today's concludes This participation.

day. disconnect, have great now may You and a

NCR Atleos (NATL) 4 Mar 252024 Q4 Earnings call transcript