NCR - Earnings call transcript Q4 2017

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Operator

Good day and welcome to the NCR Corporation Fourth Quarter Fiscal Year 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Nelson, Vice President of Investor Relations. Please go ahead.

Michael G. Nelson

you our thank earnings quarter and call. afternoon for fourth joining XXXX Good

the our Paul President today Nuti, me Bill, Langenbahn, call Joining on prepared After as your Fishman, and CEO; remarks, questions. with EVP, Software. Bob Bob Chairman along host take Mark COO; Benjamin, and and Mark, CFO; Paul will and Bill is

our be they're the we you These in certain Before of Relations in our would non-GAAP our I to periodic we and and call, measures. These subject and forward-looking report. also and today statements. that, filings statements discussions Mark. later on are counterparts our that actual our website, their presentation risks including turn could beliefs, now get are expectations. will A GAAP of release today's started, materially results to but on ncr.com. to risks that and financial let annual uncertainties the and to described Investor over with will measures With will our to and earnings materials uncertainties like me from call this non-GAAP expectations described reflect call reconciled remind replay These current cause our include those differ the be page available website. presentation discussing the On SEC,

Mark D. Benjamin

finish by a results I and our will call. Thank outlook. you Then, business. you, marked begin challenging updated Michael. developments year last metrics and at the Paul, through we our further key quarter take a high fourth for largely year on as of the finished will detail, and QX our discuss end joining the to full earnings provided Bob Bob well everyone our today And walk for I'll highlighting as as your thanks questions. to expectations and good us Bill, then XXXX call. financials for our performance

focus our efforts our our of strategy original around enterprise. our accelerating short entire including our demonstrates the expectations, modernizing the cloud this transformational quarter year of across fell and growth, key full While areas business Services

business, up the First, cloud our year. fourth with regard accelerated compared to X% and quarter to revenue last finished

full the by $XX million. our to we was increased year, also For cloud ACV up XX% while net X%, revenue

Given the on ACV in double-digit and expanding have growth, approach along we cloud net our progress track believe increased we to are strong growth cloud consistent demand, with our we top made XXXX. customer in line solutions

improved quarter basis deliver points Service productivity Services Second, in and and the to full expansion. continues our year. business up points margin in XXX finished driving XXX up were focus on the basis our efficiency margins for

We we believe over terms forward MX segment. improvement to showed accelerate year have or often can and in of business transformation. particularly efficiency and that number of Mission opportunities we see continuation a about Services our trend our productivity talked a growing the QX capture initiatives, our gains One in past the of Services we moving

during company we our the engineers. success continues year-end focus driving are on be Building more Services the XX,XXX business, have costs. achieved by improved holiday our availability Services performance we the with I history NCR reduced in transformation Our our pleased couldn't to critical service increased the transformation. best experienced SLAs, performance the as in and measured accelerating roughly efficiency Services increased and of productivity customer Services deliver important season. on

on structure $XXX intention million in our The cash margin me very exciting on our XXXX we hear cost a working with we our about flow significant led we going our also forward. to impact have expect will have minutes shares are in strategy, Bob our moment. XXXX. Hardware couple repurchase some Today, of confidence and will a address full in us initiatives You'll free of introducing has profile up our during announce talk year we XXXX financial around combined targets, which are to business which a strong to

total Revenue in which revenue speaks an Recurring Now currency and QX, up on revenue. growth by the having the ongoing in to in X% success end to XX% our of quarter QX this we're was business, increase, range and basis. generated quarter as in revenue call. slide $X.XX Hardware offset which growing was constant and Services of X% of X guidance our driven down This a the we X% cloud to We provided sales. our overview by reported financial continues came the QX at billion was high in comprise lower performance. of on our revenues. This

range improvement Software offset which X% basis. currency in back driven for year. gross our non-GAAP currency drive Non-GAAP gains. made the finished growth constant X% million the of was growth segments, in XX at revenue, expanding working guidance strong due was cloud Services for X highlights XXXX. in were cash offset points revenues Hardware a up continued recurring constant $X.XX, and lower year shows XX and capital year the by Revenue which our process but currency $XXX partially in lower a a to basis we by points QX, at further on was we financial margin segments, as was was initiatives reported up rate both basis basis. ongoing Hardware on which contracted partially $XXX revenue. Similar the Free end flat Slide increased provided. as reported of expansion than and during on efficiency were prior expanded business Services, in EPS the Our was million, XXXX. to the decreased Revenue high the our year by flow X% Software constant the which margin and our Margin progress and to

business. for the X%. year in full cash $XXX diluted XX% XX the year. growth Software up improvement our Services Non-GAAP as flow driven we increased was of non-GAAP For higher million for our rate a year, well $X.XX was margin revenues and points, rate impact Free achieved in by conversion basis margin in EPS as the the initiatives XXXX,

an within which has overview to Services NCR's as of a market. the Software is X, to Moving solution-driven continue become led clear vision data driven strategy our offers business. a strategic on we omni-channel and NCR execute to slide

talk us transformation about heard time. have for some You branch

We their relevant are seeing as financial positive signs embrace physical branch of the our becoming institutional they network. to increasingly channel more customers retail

new Branch the provides NCR's, transformation is network transformation taking allows XX the recently this achieve solutions a and channels example, of markets. products expand key financial evolve to the branch indicative its customer importance to announced combination Chase, For mix of XXX and to and of up to XX to strategic the The of sit of This a assisted the open offering Software branch new the intention personnel branches Hardware right of market. service place in their of to the to and epicenter the customers in branch and transformation evolve their NCR transformation. while costs, institution a self-service managing JPMorgan environment.

advance Israel, FastLane to leadership Israel. Bitan expanded market where our in continued the installing position SelfServ one supermarket begin we self-checkout within Wines chains checkouts. NCR our largest of will also We Group, offerings into

in deployed which a frictionless shop by Our Russia. Globus creates scan US was FastLane and shopper, Woodman's experience, you in the mobile as

purchasing. the like strengthened to checkout resources powered pay, software and take to in computer creates quick up automatically way the and Assist, introduced intuitive like fruits shopper retailers free artificial on to vegetables leadership mobile is together, scan, which the that new store our that self-checkouts and and All higher software of Picklist We innovations and for Services with with reinvention use shopping vision also NCR recognize transformation allowing a new intelligence valued by shoppers to easy click-and-collect. pack

And Day you XXXX highlight few, Software accolades. latest report one Point we a the report Global Reuters. on XX FastLane with for recognized solutions industries and our Leader design Thomson out X, RBR's laid initiatives it and half year productivity Our I third-party discussed innovation consecutive $XXX for a of XXXX ATM the leadership initiative as Technology the second superior thought strong to NCR We of just Top evidenced line. a identifies million global excellence with finally, Checkout drive million with half On global the Series slide ago. business into and recognized point-of-sale at by Sale DESIGN progress hospitality provider GOOD Self-Service was provide $XXX is years million and services Investor to software as $XXX Global number NCR was Solution. the per were XXX industry to Awards, or by reinvested and in two savings To important retail retail financial including the product our year. by NCR's bottom in to XXXX for dropping four the

our We goals. are on to achieve track

and XXX improved execution. over by margin experience We our improved created have Solutions expanded customer by to points, Services sales Group cloud points our an scores drive help service growth, revenue Industry basis accelerated XXX basis

We are far encouraged forward. we've continue progress made going and expect significant with savings the thus to

on are at to on forward details multi-year York. a of providing accelerate these the a more confidence, sign level XX As look earnings May a high New restructuring QX key Slide X transformation program and areas. in I that Day our provides evaluating call our and that will of on our we view initiatives Investor

margins. network We drive higher initiatives our continue to transform are and manufacturing Hardware looking to supply and number expansion sustainable of margin Services at long-term a to chain drive

are we about making are utilizing our which is competitive excited our are We best decisions, position, the the very company. resources solutions Software-led This global right focus to and decisions, accelerating with transformation restructuring and a consistent tough on strengthening our future. our

our opportunities, and continue into value. This margin focus us organization share is We allow seek better that increasing the to-date will positioned leaner, to drive efficiencies. operating investment to will on efforts shareholder expansion create on market long-term revenue attractive hasten most build transition and progress to a to our to drive efficient while more and

resources, will rates. components, expansion. these Software, addressing growth development current accelerating focused our Services through In our internal streamlining centered changes are highest of business long-term Looking management lifecycle and best processes the on making and drive our utilization evaluating teams strategic areas applications we focus our is are at we simplifying potential ensure increasing upon and margin improving service represent offerings, the on the each This as the Services, build offerings strengthen for remote realigning and our our and NCR. sales our success offerings, starting that of growth will predictive, potential organization product engineer our structural by believe and We portfolio. further focus will customer Software key areas, our such optimizing around the in

can look and better products and more operations Lastly, we we are taking at a to business can determine efficiently. very our identify build we Hardware our streamline hard where how

extremely excited We are about opportunity. this

optimizing our and out and We on cost of processes infrastructure. and focused further facilities operations driving products are our stabilizing

our We Hardware shift a aimed evolving are Hardware largely structure variable from to reduce fixed our structure to exposure and a more costs cycles. manufacturing strategy cost to

focused utilization expected to working and also through minimizing on network focus global on all and our time which optimizing a rigorous are chain are rates and supply inventory, We our of quality, delivery the improving margins. on increasing localization, improve capital having

are $XXX per $XXX $XXX by Investor at transformation accelerated outlined per range savings million to Day. our enterprise, we million the the assume This $XX still the costs transformation discussing the with of savings million our savings incremental believe by two XXXX cost two actions $XX of approximately will of generate accelerate segments last cash to rate now margins. restructuring and to outlook drive our us be million payback. next programs of $XX an $XX each and of competitive across in $XXX of detail. expect next our more XXXX. entire year run Bob, our annual million million With the over further strengthen While year investment the attractive initiatives We our that finalizing We financial associated that, require turn will it to walk Bob? allow through to over the who'll we annual years to we across million and the million enhance are more I'll years position, our performance transformation over in

Bob Fishman

shows offsetting quarter, flat Hardware revenue, X% constant with a our X% impact points, of for our XXX and in of with X increase revenue fourth decrease are an in of Slide expectations. declines expanded mostly Gross margin currency, in segments. results revenue a the Mark. summary our in you, Software Thank segment line segment previous of in which Services Software Hardware basis and all the of margin Services

million a We XXXX. we compared year. of primarily include to plans international segment. details mark-to-market will more for through each to in walk due go adjustment results the our $XX reconciliations. pension favorable pages, The decrease quarter for to as include into with the our In the prior the we $XX GAAP GAAP results non-GAAP was The supplementary million

Additionally, reform. reflect in related a million is of two include the fourth impacts The $XXX of GAAP to the charge primarily provisional non-cash items. results the quarter charge to U.S. tax

to First, million to write-down a assets our XX% the charge rate. tax lower $XX U.S. corporate deferred tax net

million $XX charge of our a of earnings subsidiaries. non-U.S. deemed a Second, repatriation result the as from

utilize as repatriation result able resulting settle a results. available cash expect shows foreign Slide XX the credits the We Software be to deemed charge to in to of no impact. our tax

ACV as revenue in continued full Software $XX the flat the of our from business. cloud by in momentum of cloud was of prior XX% was revenue Cloud $X QX up sequential X%, net strength FX revenue pleased in cloud new the year. up year We're with quarter, the with growth bookings demonstrating reflected excluding million, year-over-year. million also

constant licenses enablement license a than digital to currency was due X% associated which ATM better due revenue on channel Software result strength Services to basis transformation lower and Software Professional with declined Hardware XX% a basis down constant a revenue in decreased currency increased on sales, expected. by solutions. XX%,

also maintenance sequential showed Software growth.

was scale revenue. license to efficiency our rate in partially decrease maintenance priorities from The and improve Software Software down was lower execution margin our revenue lower strategic Software gross businesses. to Software and continued due offset cloud on license by

the continue margins. time, see Software performance Software increase for we as and in margins expand to expect We cloud segment revenues over and maintenance cloud we to improved

by of implementation was strong managed top points with our a annuity margin to in driven Hardware expanded gross currency rate increase growth maintenance line another quarter transformation percentage for basis addition on expanded income, and demand and points Turning where XX, had operating X% basis a channel services FX. and growth trends XXX revenue Services excluding revenue, to XXX as The reflecting in slide basis services. expansion constant continued

centered where efficiency. our is identifying We is expand our improve Services customer backlog to gross the which are rate MX for structural and Services how our the metric pleased Services face improvements profit initiative. with terms value, we base continues through sustainable to we our the higher margin file on business. due MX can and of modernizing our business in service areas achieved

also focused are services achieve on which higher We driving managed helps stronger margins.

customer the reduce the monitoring of Services and Services resolved we big and customer execute increasing continue onboarding in Our service be data our efficiently, repair investment predictive segment. in dispatches analytics more number remains to margin Sustainable allow strategy. a cases to as margins expansion key focus

revenue constant was Turning to Hardware basis. a slide down X% currency XX, on

Our the slightly lower in expectations. point was sale in to a reflecting gains omni-channel year. the backlog convenience the four down a in of revenue market QX strength, XX% continued new comparison revenue XX%, than XXX% of market. revenue the introduction portfolio due after and ATM to better the QX quarter, quarter down solution due but core of was was and of share Hardware of in last ATM previous difficult fourth show year. growing in prior quarter XX% being to in beginning was Self-checkout the up down the petroleum quarter

as self-checkout we large margin segment year. results significantly the a transformation. global significant accelerate prior rollouts of by shows and driven Hardware However, volume demands. full lower Improving customer Slide the gross introductions. increased focus ATM to margin rates new XX quarter rate ours from product declined our Hardware is due our for amid

reflected through pleased XX% still XXXX. significantly total a their operating Software revenue by new Services grew operating up gross XXXX. Hardware margins XX% income in largest driven licenses, margin the The segment up SaaS business improvements of as down and year-over-year. constant income of expanded attached of to accelerate, by an our of at prior net momentum in The was remain up Cloud sale, with component highest MX. of basis Services in at independent XXX revenue in $XX bookings Software segment our represents was the was continued We our X%, year achieved sustainable XXXX period in Software X%, or revenue X% led increase roughly million sold the XX% by and points by X% revenue currency. ACV On is Hardware Software bookings.

XXXX Our XX, to providing $XXX points revenue visibility basis recurring and continued the in flow QX QX represents year slide and XXX future free year. and XXXX. $XXX free prior margins. you QX $XXX full million full the due capital increased for year can flow and and strong flow cash year-over-year, grow full cash revenue was to improvement of streams than On better million are million higher in cash performance, see Both quarter the for lower working but the year. Free

We free flow leverage XXXX, we financial The debt ratio allocation. consistent times of Slide the XX% our debt-to-EBITDA for year to times which net QX full provides metric X.X shows are represents optionality a at into conversion XX continued move pleased a rate improvement in with as expect cash our increased compared trend and XXXX. X.X forward regarding of net leverage the with board reduction year XXXX. with capital when full

continue shareholders, return and to M&A pay cash down evaluate debt. will We transactions to

million. to up XXXX. our repurchase share programs in stock we to release, repurchase of you be existing XXXX X%. $XXX purchased will guidance. to find under Revenue noted To-date, expected is year up during our On have million we our full slide to approximately As $XXX growth XX, earnings plan flat

the year, the business mix consistent help our will segment improvement. operating of margin expectation revenue in our is terms drive and for In strategic full shift by guidance the with

include expected And to Hardware is to higher down Software growing low improved single-digits. grow XX%. expected single-digits low to grow to to flat is mid mid is cloud services. of be and single-digits mix Services an approximately expected value with

$X.XX to $XXX XXXX. $X.XX includes is be million to $XXX restructuring by our savings pre-tax $XXX billion Annualized expected GAAP to an and million Our expected EPS plan. related to charge reach estimated are to

EPS at up be the the midpoint, the year. Our X% to is Operating points prior all driven $X.XX expected basis expand are segments. expected margin non-GAAP margins to year, for to by in X% $X.XX to versus gross improvements XX

We our would improvement will rate, a rate will U.S. XX% rate. which tax tax over million lower the a $XXX tax XX% that XX%, in X% the the rate Approximately XXXX roughly effective X% of from are our in be earnings benefit imply or XXXX. effective tax estimating benefit

credits the impact our law of However, raisers tax the the manufacturing to change revenue primarily domestic deduction, other rate, domestic our in foreign limitations will several ability use loss the of on provisions, offsets tax XXXX. items provisions tax in in and our X%, impact the The at international the broadening approximately base. effective aimed U.S. benefit tax by these of rate the resulting XX%

expect be non-GAAP cash free flow net XX% approximately to We of income.

free generated and earlier the in to the flow cash to years, expect majority the follow a working flow of fourth in requirements free year. We capital linearity pattern similar cash with previous quarter higher

approximately discussed our approximately of Our cash Also the XXXX. flow cash million tax is earlier. initiatives $XXX versus free in flow accelerated XXXX effective free expected XX% included rate we guidance in includes of for rate tax an guidance cash XX% transformation our

U.S. been encouraged years, tax U.S. below which by this reduced income cash back significantly and second supporter of to more our tax the on effective As rate NCR appealing rate. the has repatriate and expected XXXX lower of legislation overseas prior U.S., reform is enables. a is of tax U.S., rates tax corporate in the investment to tax dividends the elimination in layer well strong environment earnings, rate the

guidance. our QX have XXXX we Next,

X%. X% We expect to up be revenue down to

is to EPS to non-GAAP expected be $X.XX $X.XX. Our

revenue half with starting in license revenue flat. the backlog of the roughly the is year are year. first Software our and This Hardware We impacting

we versus for half lower year prior of the gross first expect face backlog year. as performance the the profits comparisons and second We the build improved expand margins and half, the in easier

Our With to including for perform it recurring revenue, over well. closing cloud turn continues revenue, Mark I'll comments. to that,

Mark D. Benjamin

with remains services in self-checkout. around aligned markets including solutions NCR an organization delivery global finished billion end leader a today, company world. revenues, $X impacting the and point-of-sale of XXXX leadership as our summary, Software cloud In and We in accelerating critical with Bob. the megatrends global applications, profitable a increasingly hardware ATM, the Thanks,

success and aligned Our flow. us in our recurring of revenues each of enter transformation to We are expansion. best We growing Software-led free continue converting long-term portfolio with excited strategy, diversified remain cash to and and that We XX% NCR position margin our sustainable our we growth are market solutions and and innovation, market approach our about our our the trends a believe confident over long-term are focus markets on position. and efficiency enterprise. into future customer our generate positions XXXX enabling

aimed our These initiatives highest across our evaluating margin margins initiatives our while highest increase growth, resources payback. are our segments prepared our attractive opportunities transformation Services a We Software to aligning we That and the strategically accelerate remarks. lower in and provide very with segment. will concludes Hardware margin see

Q&A Bill Langenbahn, Joining and Bob Paul are Nuti and business. for me Software Head our of

Operator

Thank Morgan Katy Stanley. We'll Huberty first you. with go to

Kathryn Lynn Huberty

Yes. have afternoon. Good I on Thank a together. you. I'll ATMs that questions couple lump

do or expanding as branches You whether around to and accelerating trend. it the heard tie what you've relates parlay as if then, flow into to discussion tie it a So, transformation a increased branch trends headline there, you shot you around half of of easier think broad-based the other earnings to into fourth first in cash brought free together. from that that whether of think that backlog? saw as idea JPMorgan in the growing reform And to ATMs second in you all tax expanding investments for the can by XXX. a either just that's I And the banks up branches, how order Curious And figured did is importantly, lot ATMs quarter orders the a more half, year? specifically, expected? move there you know you for but it's grow versus then there's perform what just you in that we ATMs rebuild

Mark D. Benjamin

right, All Thanks Katy. Mark. for It's the questions.

long-time obviously, with JPMorgan, partner regards partnership. They've of in thrilled just been the a we're to So NCR's. their

transformation number markets that their the additional the the prominent. really took enable to solutions serving that modern automating the many really the ways, about experience to talking years, very branch of certainly expand becoming functions highly automated. once really announcement or been we've teller customer representative Certainly, speaks more branches our a their for in retail to think and I digital a occur with becoming

just So, JPM opportunity. the I not it's think

we've with about the that's this. is been been think We've I globe. doing transitions? institutions possible. reform financial this talking accelerating think tax and Do as banks the think as helping I around their I that far

are I in the number a market past cycles. think opportunities the refresh ATM of facing there regarding regarding what about we talked upgrades, XX Window

So is position to and there of keep banks the themselves them continue number competitive why think I market. will a to drivers plus in

QX As at really QX. an Bob up, and XXXX because We QX tough we when will actually a pretty looked did incredible did orders quarter follow had for comment the XXXX. really in the far QX have maybe QX compares on good we ATMs, we as have

this year. backlog versus flat You XX% We're into coming XXXX. the up remember story

front QX. did a So some we in I for the compare, order tough good think see in momentum

months, having year. course, month about market get XX geographies. to growth As that the do to we've the XX, XX, The Windows to for be has our we XX that of made Series, overall by, for the follow-up we gaining last modern decisions far the growth really there's every to going upgrade. as ATM that in to the recyclers story clicks some growth, far ATMs. The you goes in continues leader some that closer into to every think upside business, see will been share. that a while talked with this are which quarter good very modeled We'll growth ATMs as expand, new by, Katy, enter XXXX as We today,

number XX just fleet. NCR XX, those drivers will out we X talked kind months cycles the is phase these really timeframe. in refresh million the field, We've ATMs, about refresh there in of of a the are there of see, cycle So roughly next

Bob Fishman

point the XXXX It this Katy, Software in and XX% look of down Hardware roughly Implicit XXXX Bob. agree you pressure ripple main on with an – then for that's was at, in attached I And business, revenue. in terms flat. effect is would ATM a had ATM if guidance Mark our license. was is

improvement Mark as significant upside a that the a and well some Windows as of includes So the mentioned lot for items around XX. it of us

Kathryn Lynn Huberty

Great. flat quarters. you last that? around I was just ATM follow-up weakness, what's why may to driving talk Thank issues the Can Understand you. a about the on just Software, And if is license down down? attach when unattached but you license two that's is built cloud then, half? second you in double-digit XXXX, year? as And through move about rate in the you. growth me. And growth it linear the into think then, the Does that for unattached Thank

Bob Fishman

Software and This up a I'll make over it XXXX comment license quick for on Bob. is Unattached unattached hand Paul. Software to license then was XX%.

year. say lumpy XX% XXXX. for So with deals bump up as we number that's would I up we're the a business a prior be overall, can against But, number that were proud of. quarter-to-quarter It pleased

momentum us year. going confidence offers of launched confidence that XXXX. new continue strategic and have number into that the the half have in We back been of give the There's a we'll

Paul Langenbahn

Paul. Yeah, Katy, this is

doubled just on a on there products and starting of to think good bit down growth. as I'll things the we've modernized is, Software – thing portfolio see our we're side, funnel that'll I growth little drive the future the

are, for the You that self-checkout solution transaction you significant We're Financial our will, us. Shopper, good in seeing really authentic And processing and if heard our kind starting Mobile these to drive of replace which are of is Mark offers. new Services. portfolio our Software some FastLane offers of growth mention to start frictionless performance more aged

pushing converting more and say more envelope The the other on is cloud. are deals I'd thing we to

bookings, in that expect that in you XXXX. the ACV to in And to saw so, accelerate if we XXXX, continue

orchestrating we're well on the perform really think so, start And we better as can side. cloud we to that where

through as way And be so, well. that managing we'll our

Operator

go Coster next We'll with to JPMorgan. Paul

Paul Coster

questions. my taking for Thanks Yes.

restructuring the to is margins bit up, And going is new hitting it pricing in is there? dynamic? What's this or us talk about levels, a First of kind changed market? trough little ATM function particular of how change that the a versus it to capacity volume

Mark D. Benjamin

Paul, so, for mean I the question. Yeah. thanks

And side, in the speaks volume margin a for issue the it's that to I us. I On ATM spoke largely opening which comments my to. know really point, second

we face operations chance how even a step around examine fluctuations have last back to disappointment really and ATM that volumes ATM You volumes know to growth how are structured. Certainly, the and for had relative our really in year matter. we with SCO and market the

and us we our around that. our our cost We're to the drive really and significant greater do We of around today, a we have globe fixed business nature today variable lower network opportunities as different and speaking factories in transformation gave model. we a out it cost the manufacturing, improve our So, manufacture today chance to model five utilization. footprint Paul. as Hardware, How get how rates factories far do example, really an of utilization as across a

We organization also Hardware a our from us midway great through the with really over year that calendar have a new joined coming last year leader experience GE.

closer So, to face of variability It'll lower how swings think you're way occur to us. get change the seeing us a can in the goods. customers we now to programs really drive lower we be the able cost, I with give produce handle what restructuring the really to market, really the and fixed that here costs, our chance

Paul Coster

Okay.

comps, which EPS and that another you rather, midpoint, a first us should trough that the half discussions the of XX%, is half rest thing significantly stage you us this is of the level so, the but kind about is terms that or second to the that come quarter year-on-year to other of first year is XX% The year going forecast? second what That's the revenue – I innovation flow quarter is visibility early terms in to in little the I so think client in in what, through order and it's a – guidance. contributing. about manner first product of about loaded think Talk talked the what people relative of going confidence to drives give in concern bit backend

Mark D. Benjamin

thought understand We show can half disappointed that. make the a Paul, didn't incredibly would. me Bob We as comments last follow-up. be then I this story for it mean, couple I'll we materialize Yes. year. were to and back of it needs a year that certainly,

if was this So as the are us of good obviously but will but again, have will, and not a absolute with on the the performing bring with orders pressure dollar QX of we a is The recurring come Software an backlog into license business XXXX, we have expand system. year, the basis, lines Again, it that in skewing through some flat the you backlog to growing. backlog us. helping

includes So, that revenues. cloud

half we've as revenue as think a when look at significant from historical averaged around departure not it's back previous in we trends also very composition, I far what years. half, front the So the

the confidence So, get the again, the in easier also confidence we have us. we're guidance a comps giving have in year, of lot a in back for today. lot half we of you The

So, obviously, it that helps story year and derisk where the last the wasn't case.

So, Bob, to you up. if want know don't follow I

Bob Fishman

$X.XX of of Yeah. we speak XXXX, I QX quickly have could down the about QX line. being Well, versus pressure below if of about terms QX in

that and Mark's in QX. is the And of OIE So back invest self-checkout R&D the in as half rate. Software and in tax we to the selling of down, we causing backlog expenses point, as which have do growth that pressure then, year. with year and license into higher we come QX drive To in think

half, three and do, in XX% right the So, back in back at years, are rates you revenue XX% in improve, revenue the when backlog cost and This on the year, the XX% Mark's improves. But an actually, the takeout, historical comfortable half, typically of only per the XX% point, that in XXXX. XXX EPS Software perspective, revenue we of I off look again, over is year first XXXX. on first back including top at That's guidance From right similar the of the share and very the guidance our of earnings you our look first and of points linearity half last again, of gross half. in half mix basis average of our the with when margin comment first XX% has half half, The in around would trend, But quite get the and XXXX. grows, versus the back-half. my top our to the XX% be EPS guidance, can our in to QX.

again, done in very linearity, past we've and the the with comfortable similar guidance. very what we're So confident to in the

Paul Coster

you. Okay. Thank

Operator

with Benchmark to Dan Kurnos next Company. go We'll

Dan L. Kurnos

Great. Thanks. afternoon. Good

couple. a Just

of ATM First last of you looking on call, about last up talked call, ATM. – kind At the XXXX. end the on for guys single low

obviously, the there, don't punishment JPMorgan you've issue. optimistic to even activists But just year? obviously issue of around has separately, conservatism guided to the really – to you for – think to it you've on your backlog has the for from announcement. the know of company any share on Now, part operation lost if Wells guys your I no And on taking do of or any the chopping specifically market flat. And outlook. and it's really the go any room then the Diebold, sort Do with share, operationally, thoughts you're the backlog now there's of just after or want some they've been I but the sort change delta don't effectively. anything sell just there's kind the you if head? starting kind impact know the where with of if that's CEO you're them

Bob Fishman

again, numbers. call to this around I to digit at the last was I'll in the revenue down take build business. guiding the would that the in point is It talked there ATM to over is Bob. about within the year. flat This we're single that responsible my for growth business, comment upside XX% possible low the last that say we in is one year, growth improvement on a huge guidance ATM want but that XXXX, start. Again,

XX, opportunity from perspective, old upgrade when when average $X,XXX. about less to we look Mark service I have five than perspective, XX. an years my upgrade there's are the that look from is at upgrade possibility So the from at The alluded Windows Windows XXX,XXX that revenue driving of we and this, roughly that ATMs

the anything year. million will suggest there's to recycling certain Middle these bigger about of XXXX, years over ATM factored the shipments Mark think which The enabled with not for there's do $XXX math, become going just with three that our Africa, the in about we in there of there in would piece NCR are on more when in Series when a CFIs fleet continues the upside next Europe, also a experience might you then, and traction. Windows East, being Europe. recycling, and years the to with gain when of base. terms and you the XX which seven of for So talked come installed some the average half CLA, that's six to and have $XXX NCR, back us runs million at over we've age, And more regions, opportunity years. look trend X all We for

factored are So those the that things in. are not

the I at the ATMs when a back a there. I is look number flat good to for we think from hopefully, start year and guidance, build number

Dan L. Kurnos

on Diebold? on And the taking thoughts Diebold, any share from

Mark D. Benjamin

Yeah.

Dan, So Mark. this is

we our to gains. share enjoy really market continue So,

we company internal aligned line model, is in really quarter, history chance about the of where organizational the question products model this a little a a business are NCR a last so the Our market just and ago keeping as cited the of year to the you external at take to score the because here essentially we new reported. operations we which way this I spoke with bit will reporting meet the leading. quarter, really

did which, well-established and internally, at have Hardware, doing. Software bit large distraction look when hindsight, a they what organizational as So this was year, last Services. sitting, in we model. were we're obviously with in internal it a This shift that changes and did time, back, of cause were did people some it where I year And that

new over our of associates. X,XXX sales sales running a force have field head global We of

just referenced season NCR year-end customers earlier, Solutions, with out, as I came NCR a with great Our Services.

take the that and our execute in into So, Dan, of all if really position. ability like account, we our to you market,

Dan L. Kurnos

transformation. Fair top roadmap we've talked the right. both the to just A give should then the new – you I about the ones bottom but the savings sort if investment us on to in impact do the gave certain of are past. that the just as and expect All enough. how as life onboard us around you line? think Can to have kind quick and accelerated of any couple for or about of to there just know some end-of-lifeing you know see you impact the term, bring if products the revenue a in of I we any end you products new cost numbers subsequent of impact incremental addition there? investment, pace the benefits and longer

Paul Langenbahn

Paul. Dan, Hey, I'll this Sure. that. take is

primarily the directed at portfolio. that's think I Software

them petroleum of portfolio whether of to area focus the that of consumer all expect management the putting around growth the product in is a we of incredibly checkout frictionless more we're life, that of excited so are we into the for part can there focus we that traction end for We offers. outdoor the have drive about transformation, dispenser, or products invest is of things transformation just retailing of sale generate we referenced experience, the really, offers lifecycle where new pruning Where some the mobile shopping, that we're NCR. or first us. earlier a new both those end all, the So, lot of convenience out will that and experience of front-end retail transforming

forward That'll support that invest invest the in thing to the is end through XXXX, XXXX. last to which So to give in The strategy. life us I'll part made decisions going we'll for Software of you some perspective the And to of on more will XX% platform on about we XX allow about on everything say work of products, is continue our that, most we'll growth. continue in that portfolio.

And the earlier. cloud so, about talked a will Mark licensed of strategy platform also through component that even ODSP that component have that products drive P&L may our

the lot us, of acceleration where will strategic those a and for to cloud So, That's about there. everything Mark from. the ODSP around that hang centered together, driving offers starts come talked

Dan L. Kurnos

just just housekeeping. it. That's then or Does one, buybacks And guide the last not? Got Bob, include helpful. the

Bob Fishman

potentially as does that upside think $XXX of million Again, at you the million the we X how what share not includes done million. date, associated and remainder with of could the think that the depending we've I guide the quickly price. $XXX include $XXX to million of on buy but

Dan L. Kurnos

for Got color, Thanks right. the it. guys. All

Operator

next Markets. Perlin Capital go with We'll to RBC Dan

Daniel Perlin

bit into reconcile back I'm Bob, thanks. backlog you really of and a far. half the orders so what with called kind little the flowing out ATM fourth had Hey, trying just quarter last for quarter to in

said conversion backlog you had you rates then, and about shortfall to million. said revenue So, $XXX kind in of another thought expectation had would the that you $XX grow million translate

think that into flat thought XXXX, flow near million So be or of number. thought I we I which anywhere wouldn't a like that $XXX would was kind at least maybe

you heard said. the that guys reasons all I So

maybe reconcile transpired trying to make as well of into kind what conservative. I'm you're those comments You're into the just what just we sure quarter being fourth guiding to. as

can me bridge help those? So you

Bob Fishman

Yeah.

QX in the talked that throughout right fourth of those you that pressure or XXXX, The was had in terms away so come about, numbers us in that were reasons not view necessarily QX. orders the we those quarter. to In the would

comparisons need the are to the win the the orders Mark much QX easier. we in business, ATM And and the QX backlog, QX. point in drive build to raised, those in So to again, QX and growth

drive early year drives goal to is the that growth then half. the the the orders support ATM the back to in backlog in So the

Daniel Perlin

of back half? $XXX So going messaging? hole million a are that the kind somehow we're you at the year of the saying to and reconcile Is that starting the in first of half still you're

Bob Fishman

slightly growth position, and But would QX. based the and half I of grow is of I half. improving with be on the in in then then year $XXX the first backlog not the start in QX slightly would would it pressure, would way ATM The down say down the back but I million describe

Mark D. Benjamin

Dan, Mark. is Yeah. this And

ATMs really conversion backlog think add, the also last versus the us rates what to are I year. So, impacted

converts. So, year actually this about history looking we very I thoughtful the backlog think and the that and trends were how at

the compares know I in but, because get point conservatism So, want oversell to again, the mentioned I that your question, will you don't easier.

meaning show We again, to starting we positively. are of the start year, this movement to QX. some in American as orders on bit, are so to we enter starting see themselves a see, North And

meet responsible. think again, we Bob's want So to got I to it be covered but is, this and our commitments we want right,

Daniel Perlin

investments, to also make want I have right. Understood. I incremental The this sure just

said, previously, to going million. $XX you're invest to You have

or saying incremental effect. rate by to $XX that $XX to million it's $XXX to savings, XXXX. something so million run the just That's talking you're achieve on in to million million a cost $XX basis million million, to $XXX expect an Now, which you're $XXX you

clear less layering million in it thinking heavy million. Is to So to wasn't are about and that me $XXX in them? how or you're XXXX that in $XX XXXX you how

Bob Fishman

cash but best it accelerated cash The flow $XXX have to savings, in and of our free a flow, would cash flow think free is million about driven negative without XXXX a way free transformation impact in on Yeah. the $XX had million million would have XXXX. cost so $XX

been transformation, we to would've our to million is $XXX $XXX of it if of million. we're with saying spend last cost. now that we running about million What were $XXX Day, Analyst the terms at going we're talked in So,

think to $XX incremental dollars the it over as of So next million $XX years. million two an

drive to as it's but do I had to $XXX accelerated Services this that'll transformation that's if my a challenge. have I address think and $XX why cash savings million had $XX million than good do for call not gets obviously, it, us So, but That's it accelerated things have payback. in to more XXXX, XXXX, more XXXX, flow, we we pretty our continue transformation. why ramp into in now. I That It allows want by margin would Hardware example, me importantly, like free million margins,

Daniel Perlin

real just last And one quick. one then Okay.

what of review the you wondering year, and the jettisoning I'm As you looked went process might didn't other costs of and that this kind all the if throughout things guys have consider might that, that of assets like. kind for you just through strategic inside process unearth

without You financing the get want rid of maybe to can't through you go structures down road. cost all stuff, these

be any thoughts helpful. that Thank you. So, around would

Mark D. Benjamin

XXXX saw annual the also strategic in we've NCR. this really you good that a a at with improvements a of it's and No, the lot opportunities as Dan, really the part is investment. and in us and worth can, XXXX A, continue to Yeah. is plan we the run here great these had, also we And gives confidence, that restructuring success Certainly, will which the as of through execute in cycle well in aggressively a at question. Services go return margin show restructuring It beyond. transformation, with

think, we're very, far life running we As to have potentially opportunities or Software some well-identified PLM our within product jettison management other business. I business I program think as the and products, a streamline

rather of quickly dozens several products that approach life will have an end us. We for of

other – Some or giving those include vendors. products products may those giving us to selling

to go there's the really against opportunities drivers. gain And significant I go team execute we Services, we is highly this as we through have confidence like motivated in think portfolio. I as the the think

Daniel Perlin

Okay. Thank you.

Operator

to next Ian go Oppenheimer. with We'll Zaffino

Ian Zaffino

Hi, great. out you. I'll once. at them questions Two kind Thank throw here and of

JPMorgan, seeing buyback, hearing way? the First $XXX one some are that them? year buybacks other exiting you again? like they been still Blackstone? it be with And spent the with how about where And and know last of I would a bought you or guess, do then guys some Was maybe what had be, stock their think there looks position. that done, maybe be, a with a that may other you've hasn't that versus are together year I obviously the about on on really about you deal guess like Is million Blackstone Thanks. happening there discussion from last was you strategy possibility? now you similar I what maybe talked and Is it similar question going the you regional and would

Mark D. Benjamin

this thanks tag Ian, the And on questions. I'll for Yeah. team Bob and maybe one.

and of digital coming Interactive our speak question buyer larger growth. a their So, opportunities. regionals first transformation The lot tier a well about, we've we seen digital of institutions, transformation, by top where community the together. ATM services cloud the products banking where way, physical with that your that the large I really drives of recycling their using the early of institutions and or the like the also, of they're part are our just space, branch think path adopters on And ahead they're community around the same regionals examples to

the I I'll it's end part and So, of maybe do a And want more nimbleness lower in - mixed, side. second but think Bob, see the cover we that community you do little regional within to

Bob Fishman

Yeah.

can't we the repurchase mean From back opportunistically perspective, I large They make left spend Blackstone. it million will to throughout year spend Blackstone, ours. have $XXX and speak the On own a They're investor of of share we shares. decisions. to for a expect terms we their in buying

Operator

And we'll go Research. to next with Kartik Mehta Northcoast

Kartik Mehta

reformation the comments being of the right are and you business, Good I'm the other you evening. Mark, considering of process manufacturing in outsourcing the maybe manufacturing or now? business the the ATM your Hardware wondering part any might about in if maybe business, have

Mark D. Benjamin

would track we're with your call Kartik. Kartik, Yeah, we right being Part mean, impacts on our little I But organization. modernization some efforts to of can't is ATM, and obviously, anything because be. transformation the that have question. the Hey, SCO, will party down across be Sure. multiyear cautious of these really aspects you're of haven't POS, a And specific the a use some Hardware I internally. and would our be that manufacturing for here think third what you on of It the I would Hardware done moves percentage business. where contract and plan. tell the

to we'll customer. in to more ultimately have use strategy accelerate. needs. we want to our of the But achieve. achieve to to improvements around is make we a capital part, many the And working does of be could certainly ways Kartik, as two-year ramp what significant it There us see outsourcing So, success, it obviously competitive, closer

of I the get we of NCR, the this. It like the So, a to teams there's driving quite program think a that but significant is are number departure really business for running Hardware program just a intend benefits out exciting. and

Operator

it I to for closing would turn this Mark back comments. At time, like to Benjamin

Mark D. Benjamin

you Okay. realize markets, a you. we of soon. look we to your we time Thank it's today, good day Well, day of a but appreciate forward and talking end after end the probably of

Operator

today's conference. That participation. for We you does conclude thank your

NCR Voyix (VYX) 8 Feb 182017 Q4 Earnings call transcript