Core Insights - NCR Atleos reported quarterly earnings of $1.11 per share, exceeding the Zacks Consensus Estimate of $1.06 per share, and showing a significant increase from $0.69 per share a year ago, resulting in an earnings surprise of 4.72% [1] - The company posted revenues of $1.11 billion for the quarter ended December 2024, slightly missing the Zacks Consensus Estimate by 0.18%, and compared to year-ago revenues of $1.1 billion [2] - NCR Atleos shares have underperformed the market, losing about 16.2% since the beginning of the year, while the S&P 500 has gained 1.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.57 on revenues of $1.04 billion, and for the current fiscal year, it is $3.68 on revenues of $4.37 billion [7] - The estimate revisions trend for NCR Atleos is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which NCR Atleos belongs, is currently in the top 34% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - Another company in the same industry, DocuSign, is expected to report quarterly earnings of $0.84 per share, reflecting a year-over-year change of +10.5%, with revenues anticipated to be $759.96 million, up 6.7% from the previous year [9][10]

Company Overview - NCR Atleos Corporation completed its separation from NCR Corporation on October 16, 2023, launching as an independent publicly-traded company[14]. - The company operates approximately 78,000 self-service banking terminal locations, including the Allpoint network, which is the largest retail surcharge-free independent network of ATMs in the U.S.[19]. - The company serves banks and credit unions in over 140 countries, with a significant presence in retail channels through long-term contracts with major merchants[35]. Revenue Generation and Business Model - The company generates diversified and largely recurring revenues across contracted software, services, and predictable transactional revenue streams, with a focus on increasing transaction levels at existing locations[23]. - The ATM as a Service (ATMaaS) model is expected to double recurring revenue compared to traditional ATM hardware and maintenance contracts, expanding the total addressable market[27]. - As of December 31, 2024, the company has ATM networks in 12 countries and generated 55% of its revenue outside the United States in 2024[27]. - The company aims to execute its ATM as a Service strategy to enhance software and services revenue, as well as recurring revenue[93]. - The company derives a significant portion of its revenues from ATM transaction fees, which could decline due to reduced ATM usage or competitive pricing pressures[102]. Strategic Initiatives and Growth Plans - The company aims to invest in international expansion, particularly in high cash jurisdictions like Italy and other EU countries[27]. - NCR Atleos intends to pursue strategic acquisitions to complement and accelerate its organic growth strategies[27]. - The company plans to grow the Allpoint network to drive high-margin incremental transaction volumes as banks reduce physical footprints[27]. - Atleos aims to expand its customer base by increasing the use of indirect sales channels and targeting the small- to medium-business market[86]. Innovation and Technology - The company is transitioning to software-led solutions, with a cloud-based software platform that integrates with customer systems, enhancing recurring revenue opportunities[21]. - Atleos is investing in data analytics to better understand ATM usage patterns and identify growth opportunities[25]. - Research and development expenses were $66 million in 2024, $77 million in 2023, and $64 million in 2022, indicating a focus on innovation and maintaining competitive position[37]. Employee and Talent Management - As of December 31, 2024, Atleos had approximately 20,000 employees globally, with 40% in Europe, Middle East and Africa, 26% in Asia Pacific, 17% in the Americas (excluding the U.S.), and 17% in the U.S.[61]. - Atleos established a university hiring program, welcoming 200 intern and graduate hires in its inaugural year[65]. - The company has launched training and development resources via LinkedIn Learning and NCRA U, enhancing employee engagement and skill development[65]. - Atleos is focused on expanding internal talent development programs to enhance employee engagement and retention[65]. Risk Management and Compliance - The Chief Risk Officer oversees enterprise risk management programs, ensuring effective identification and response to material risks[50]. - Atleos closely monitors the evolving regulatory environment, which could lead to changes in its business operations, particularly in the virtual currency space[66]. - The company is subject to various government regulations, including those related to environmental protection and anti-corruption laws, which may impact its operations[64]. - Atleos must comply with Section 404 of the Sarbanes-Oxley Act by December 31, 2024, to ensure the reliability of its financial statements, or risk a decline in stock price[172]. Financial Position and Debt - Atleos has approximately $2,994 million of outstanding indebtedness and an additional $350 million available under a senior secured revolving credit facility[128]. - The underfunded status of the U.S. pension plan was $279 million as of December 31, 2024, while the non-U.S. pension plans had a funded position of $162 million[145]. - The company plans to use debt and other financing sources to maintain and grow its business, but future access to financing is uncertain[139]. Environmental and Social Responsibility - The company is committed to environmental management, utilizing remote sensing technology to reduce maintenance visits and carbon footprint[57]. - Atleos emphasizes supplier responsibility, requiring compliance with ethical standards and environmental regulations from its suppliers[59]. - Climate change poses long-term risks to business continuity, with potential impacts from extreme weather events affecting operations in vulnerable regions[119]. Cybersecurity and Data Protection - Atleos has established an Enterprise Risk Management (ERM) program to manage cybersecurity risks alongside other business risks[199]. - The company employs various cybersecurity measures, including firewalls and encryption, to protect against cyberattacks[200]. - Data protection and cybersecurity issues are significant risks, with potential breaches leading to reputational harm and financial losses[123]. Market and Competitive Landscape - Atleos faces intense competition in the technology industry from major players like Visa, Mastercard, and Fiserv, which may affect market share and profitability[88]. - The company is exposed to risks from domestic and global economic conditions, which could adversely affect its financial performance[82]. - Recent bank failures in 2023 and 2024 have created uncertainty in the banking industry, potentially affecting sales and business operations[98].

Financial Performance - Fourth quarter 2024 revenue was $1.1 billion, a 1% increase year-over-year, with core business revenue growing by 4%[4] - Full year 2024 revenue reached $4.3 billion, up 3% from the previous year, with recurring revenue of $3.1 billion growing by 5%[4] - Fourth quarter GAAP fully diluted earnings per share (EPS) was $0.61, a 126% increase, while Non-GAAP fully diluted EPS was $1.11, growing by 73%[4] - Adjusted EBITDA for the fourth quarter was $219 million, a 23% increase compared to the prior year, with a total adjusted EBITDA of $781 million for the full year, up 7%[5] - The company reported a fourth quarter net income of $46 million on a GAAP basis, a 128% increase compared to a net loss of $165 million in the prior year[5] - Full year 2025 guidance includes total revenue growth of 1% to 3% and Non-GAAP diluted EPS growth of 21% to 27%[12] - Total revenue for Q4 2024 was $1,108 million, a slight increase from $1,098 million in Q4 2023, while total revenue for the full year 2024 reached $4,317 million, up from $4,191 million in 2023[27] - Adjusted gross profit for Q4 2024 was $297 million, representing a gross margin of 26.8%, compared to 18.0% in Q4 2023; for the full year, adjusted gross profit was $1,033 million with a margin of 23.9%[27] - Income from operations for Q4 2024 was $151 million, significantly higher than $35 million in Q4 2023, with an operating margin of 13.6% compared to 3.2% in the prior year[27] - Net income attributable to Atleos for Q4 2024 was $46 million, a recovery from a loss of $165 million in Q4 2023; full year net income was $91 million compared to a loss of $134 million in 2023[27] - Basic earnings per share for Q4 2024 was $0.63, compared to a loss of $2.34 in Q4 2023; diluted earnings per share was $0.61 versus a loss of $2.34 in the same period[27] - Adjusted net income attributable to Atleos for the twelve months ended December 31, 2024, was $239 million, compared to $91 million in GAAP results[34] Revenue Segments - The Self-Service Banking segment generated $718 million in revenue for Q4 2024, an 8% increase year-over-year, and $2.7 billion for the full year, a 4% increase[7] - The Network segment reported Q4 revenue of $317 million, a 2% decrease year-over-year, but full year revenue increased by 1% to $1.3 billion[7] - Recurring revenue accounted for 71% of total revenue for both the three months ended December 31, 2024, and 2023, with recurring revenue increasing to $790 million from $777 million[32] Cost Management - The company reported a significant reduction in selling, general and administrative expenses, which decreased to $127 million in Q4 2024 from $140 million in Q4 2023[27] - Research and development expenses decreased to $19 million in Q4 2024 from $23 million in Q4 2023, indicating a focus on cost management[27] - The company incurred a loss on extinguishment of debt amounting to $20 million in Q4 2024, consistent with the previous year[27] - Interest expense for Q4 2024 was $72 million, slightly lower than $75 million in Q4 2023, reflecting improved debt management[27] Operational Efficiency - Atleos has approximately 20,000 employees globally, contributing to its operational efficiency and market expansion efforts[14] - The company aims to enhance its ATM solutions platform and improve customer service performance to support growth strategies[1] - The company plans to continue focusing on transformation and restructuring efforts, which contributed $2 million to gross profit in the latest quarter[33] Assets and Liabilities - Total assets decreased to $5,552 million as of December 31, 2024, from $5,715 million as of December 31, 2023[29] - Total liabilities decreased to $5,288 million as of December 31, 2024, from $5,466 million as of December 31, 2023[29] - Cash and cash equivalents increased to $419 million as of December 31, 2024, from $339 million as of December 31, 2023[29] - The company reported net cash provided by operating activities of $80 million for the three months ended December 31, 2024, compared to $8 million in the same period of 2023[31] Non-GAAP Measures - The company emphasized the importance of non-GAAP measures, such as Adjusted EBITDA, to provide a clearer picture of operational performance, which is crucial for investor understanding[20] - Adjusted EBITDA for Q4 2024 was $219 million, representing 19.8% of revenue, compared to $178 million or 16.2% in Q4 2023[38] - The adjusted free cash flow-unrestricted for FY 2024 was $242 million, an increase from $184 million in FY 2023[39] - Total capital expenditures for Q4 2024 were $31 million, down from $47 million in Q4 2023[39] - The company reported a loss on debt extinguishment of $20 million in FY 2024, impacting overall financial performance[38]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1][2]. Company Overview: NCR Atleos (NATL) - NCR Atleos currently holds a Momentum Style Score of B, indicating a favorable position in momentum investing [3]. - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [4][12]. Price Performance - Over the past week, NATL shares increased by 1.77%, while the Zacks Internet - Software industry rose by 1.89% [7]. - In a longer timeframe, NATL's shares have appreciated by 12% monthly, compared to the industry's 3.37% [7]. - Over the last quarter, NATL shares have risen by 19.67%, and over the past year, they have gained 55.43%, significantly outperforming the S&P 500's increases of 9.93% and 33.15%, respectively [8]. Trading Volume - The average 20-day trading volume for NATL is 478,682 shares, which serves as a bullish indicator when combined with rising stock prices [9]. Earnings Outlook - In the past two months, one earnings estimate for NATL has increased, while none have decreased, raising the consensus estimate from $3.10 to $3.18 [11]. - For the next fiscal year, one estimate has also moved upwards with no downward revisions, indicating positive earnings momentum [11].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential [1] - Investing in bargain stocks with recent price momentum may be a safer approach [2] Group 2: NCR Atleos (NATL) Stock Analysis - NCR Atleos (NATL) has shown a four-week price change of 12%, indicating growing investor interest [3] - Over the past 12 weeks, NATL's stock gained 19.7%, demonstrating its ability to deliver positive returns over a longer timeframe [4] - NATL has a beta of 1.29, suggesting it moves 29% higher than the market in either direction [4] - NATL has a Momentum Score of B, indicating a favorable time to invest [5] - The stock has a Zacks Rank 1 (Strong Buy) due to upward trends in earnings estimate revisions, which attract more investors [6] - NATL is trading at a Price-to-Sales ratio of 0.57, suggesting it is undervalued at 57 cents for each dollar of sales [6] Group 3: Additional Investment Opportunities - Besides NATL, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen [7] - Zacks offers over 45 Premium Screens to help identify potential winning stocks based on various investing styles [8]

Core Insights - Three stocks with strong value characteristics and a buy rank are highlighted for investors to consider on December 6 Group 1: NCR Atleos Corporation (NATL) - NCR Atleos Corporation is a financial technology company with a Zacks Rank 1 [1] - The Zacks Consensus Estimate for its current year earnings has increased by 2.6% over the last 60 days [1] - The company has a price-to-earnings ratio (P/E) of 10.85, compared to the industry average of 15.20 [1] - NCR Atleos possesses a Value Score of A [1] Group 2: ScanSource, Inc. (SCSC) - ScanSource, Inc. is a technology distribution company with a Zacks Rank 1 [2] - The Zacks Consensus Estimate for its current year earnings has increased by 8.3% over the last 60 days [2] - The company has a price-to-earnings ratio (P/E) of 15.03, compared to the industry average of 25.36 [2] - ScanSource possesses a Value Score of A [2] Group 3: Unity Bancorp, Inc. (UNTY) - Unity Bancorp, Inc. is a bank holding company for Unity Bank with a Zacks Rank 1 [3] - The Zacks Consensus Estimate for its current year earnings has increased by 2.6% over the last 60 days [3] - The company has a price-to-earnings ratio (P/E) of 11.35, compared to the industry average of 13.50 [3] - Unity Bancorp possesses a Value Score of B [3]

Financial Data and Key Metrics Changes - The company reported total revenue of $1.1 billion for Q3 2024, with adjusted EBITDA exceeding $200 million and adjusted EPS at $0.89, reflecting strong financial performance [7][29] - Year-to-date free cash flow surpassed $120 million, indicating solid cash generation capabilities [7] - Adjusted EBITDA margin improved to 19.2%, with a sequential margin expansion of 380 basis points from Q1 to Q3 [30] Business Line Data and Key Metrics Changes - Self-service banking revenue grew 3% year-over-year to $677 million, driven by a 23% increase in ATM as a service revenue and strong software revenues [34] - ATM as a service revenue reached $49 million in Q3, marking a 23% year-over-year growth, with live customer count increasing by 46% [38] - The network segment generated revenue of $332 million, up 2% sequentially, with withdrawal volumes increasing by 9% year-over-year [43] Market Data and Key Metrics Changes - The company activated TAP technology on approximately 10,000 machines, generating over 1 million transactions in Q3 [23] - Deposit volumes grew 200% year-over-year, driven by partnerships with key financial institutions [22] - The all-point transactions increased by 14% year-over-year, indicating a growing consumer preference for ATM banking [22] Company Strategy and Development Direction - The company aims to leverage its installed base of 600,000 ATMs to drive higher revenue per machine through enhanced services and transaction volumes [10][12] - A focus on asset-light business models is evident, with increasing demand for outsourcing ATM services from financial institutions [15][20] - The strategy includes a shift towards providing comprehensive solutions rather than just defined products, enhancing customer relationships and service offerings [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in closing out a successful 2024, with expectations for continued growth in both revenue and profitability [7][14] - The company anticipates a hardware replacement cycle, which could contribute positively to revenue in 2025 and beyond [15][63] - Management highlighted the importance of improving operational efficiencies and cost structures to enhance margins further [81] Other Important Information - The company successfully refinanced its credit facilities, resulting in lower interest expenses and improved cash flow [50][51] - The backlog for ATM as a service is strong, with expectations for continued growth in high-value units [41][70] - The company expects to exit 2024 with a net leverage ratio around 3.3 times, with plans to reduce it further in 2025 [59] Q&A Session Summary Question: What is the outlook for free cash flow in 2025? - Management indicated that free cash flow conversion is expected to improve, with a projected growth rate of 8% to 10% in EBITDA for 2025, suggesting a higher free cash flow number compared to 2024 [56] Question: How is the board considering share repurchases? - The board is focused on reducing debt to below 3 times leverage before considering returning cash to shareholders, likely around mid-2025 [60] Question: Can you discuss the refresh cycle in self-service banking? - Management noted that the refresh cycle is just beginning, with larger orders from major bank customers indicating a shift towards replacing aging machines over the next several years [62] Question: What is the situation with ARPU in ATM as a service? - Management explained that ARPU may appear lower due to the timing of new unit deployments, but they expect it to increase as the backlog consists of higher ARPU regions [66][71] Question: Are there changes in competitive dynamics in APAC? - Management clarified that pricing pressure is primarily in service components rather than hardware, with no significant changes in competitive behavior among major players [72][73] Question: What are the internal targets for ATM as a service revenue? - Management stated that guidance for 2025 will include revenue targets, with current ATM as a service revenue growing at 30% year-to-date [75] Question: How should we view incremental EBITDA margins going forward? - Management indicated that they expect to achieve a margin rate of about 20% by the end of the year, with further improvements anticipated in 2025 [80]

Core Viewpoint - NCR Atleos Corporation is set to discuss its third quarter performance and strategic progress during the earnings call, highlighting key financial results and future outlook [2]. Group 1: Company Overview - The earnings call will feature Tim Oliver, CEO, providing an overview of the third quarter performance and strategic updates, followed by Paul Campbell, CFO, who will review financial results and outlook [2]. Group 2: Financial Reporting - The company will reference non-GAAP financial measures to assess performance, which will be reconciled to GAAP measures in the presentation materials [4].

13 August 2024 | 2:44PM PDT NCR Atleos (NATL): 20 First Take: Revenue, margins and EPS at or above consensus, with ATMaaS strategy continuing to advance We expect investors to have a neutral-to-positive reaction to NCR Atleos' 2Q 2024 earnings release, its second as a standalone public entity, with EBITDA margins and EPS surpassing consensus expectations, revenue coming in line with the Street and the full-year quide reaffirmed for these metrics. Revenue increased 4% y/y and recurring revenue grew 9%, while ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________ FORM 10-Q ________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 Registrant's telephone number, including area code: (832) 308-4999 Not Applicable (Former name or former address, if changed since last report) or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIE ...