Revenue Performance - Revenue for Q3 2024 was $711 million, down 12% compared to $809 million in Q3 2023[200] - Total revenue for the nine months ended September 30, 2024, was $2,144 million, a decrease of 10% compared to $2,382 million in 2023[216] - Total revenue decreased by 12% to $711 million for the three months ended September 30, 2024, compared to $809 million for the same period in 2023[230] - Total revenue decreased by 10% to $2,144 million for the nine months ended September 30, 2024, compared to $2,382 million for the same period in 2023[232] Revenue Breakdown - Product revenue decreased by 22% to $684 million in 2024 from $875 million in 2023, while service revenue decreased by 3% to $1,460 million from $1,507 million[216] - Product revenue decreased by 26% to $219 million for the three months ended September 30, 2024, primarily due to declines in SCO and POS hardware revenues[231] - Service revenue decreased by 4% to $492 million for the three months ended September 30, 2024, attributed to a decrease in payment processing services revenue[231] - Software and services revenue for the nine months ended September 30, 2024, was $1,534 million, a decrease of 3% from $1,585 million in 2023, representing 71.5% of total revenue[221] - Hardware revenue for the nine months ended September 30, 2024, was $610 million, down 23% from $797 million in 2023, accounting for 28.5% of total revenue[221] Expenses and Profitability - Adjusted EBITDA for Q3 2024 was $93 million, down 10% from the previous year[200] - Adjusted EBITDA for the nine months ended September 30, 2024, was $233 million, a decrease of 14% from $272 million in 2023, representing 10.9% of total revenue[224] - Total gross margin decreased to 23.3% in Q3 2024 from 24.1% in Q3 2023[214] - Total gross margin for the nine months ended September 30, 2024, was $430 million, down 23% from $558 million in 2023, with a gross margin percentage of 20.1% compared to 23.4%[216] - Selling, general, and administrative expenses decreased by 20% to $113 million in Q3 2024[214] - Selling, general and administrative expenses decreased by 20% to $340 million in 2024 from $427 million in 2023, representing 15.9% of total revenue[216] - Research and development expenses increased by 31% to $38 million in Q3 2024 compared to $29 million in Q3 2023[214] - Research and development expenses increased by 32% to $129 million in 2024 from $98 million in 2023, representing 6.0% of total revenue[216] Discontinued Operations and Gains - The company recognized income from discontinued operations of $1,162 million for the nine months ended September 30, 2024, compared to $353 million for the same period in 2023[250] - The company completed the sale of its Digital Banking segment for $2.45 billion in cash on September 30, 2024[193] - The company recorded a gain of $8 million on extinguishment of debt for the three and nine months ended September 30, 2024[241] Cash Flow and Capital Expenditures - Cash provided by operating activities decreased to $38 million for the nine months ended September 30, 2024, down from $727 million in the same period of 2023, primarily due to discontinued operations and changes in net working capital[269] - Capital expenditures were approximately $178 million for the nine months ended September 30, 2024, compared to $306 million in the same period of 2023, indicating a reduction in investment[270] - Adjusted free cash flow-unrestricted for the nine months ended September 30, 2024 was $(123) million, reflecting significant cash outflows related to capital expenditures and other activities[275] Debt and Financial Position - As of September 30, 2024, the company had cash and cash equivalents of $795 million and total debt of $1.1 billion, with a borrowing capacity of $478 million under senior secured credit facilities[266] - The redemption value of the Series A Convertible Preferred Stock was approximately $276 million as of September 30, 2024, with a cumulative dividend rate of 5.5% per annum[280] - As of September 30, 2024, the company had $403 million in senior unsecured notes due in 2029 and $650 million due in 2028[277] - The company had a borrowing capacity of approximately $478 million under its revolving credit facility as of September 30, 2024[283] Foreign Currency and Risk Management - The company is exposed to approximately 30 functional currencies, impacting sales, profits, and assets due to foreign currency exchange risk[292] - A 10% appreciation of the U.S. Dollar against foreign currencies would decrease the fair value of the hedge portfolio by $4 million, while a 10% depreciation would increase it by $3 million as of September 30, 2024[294] - The company manages credit risk through credit approvals, limits, and selecting major international financial institutions as counterparties, with no significant concentration of credit risk as of September 30, 2024[299] - The company employs derivatives, including foreign currency contracts and interest rate swaps, to manage market risks without using them for trading or speculative purposes[291] - The company hedges main transactional exposures to mitigate the impact of currency fluctuations on foreign subsidiaries[292] Interest Expense and Financial Management - Interest expense decreased by 52% to $40 million for the three months ended September 30, 2024, compared to $83 million in 2023, due to a reduction in total debt outstanding[243] - Interest expense decreased by 53% to $120 million for the nine months ended September 30, 2024, compared to $257 million for the same period in 2023, primarily due to a reduction in total debt outstanding[244] - A hypothetical 100 basis point increase in variable interest rates would result in an increase of approximately $3 million in pre-tax interest expense for the nine months ended September 30, 2024[298] - The increase in interest expense due to variable-rate debt has historically been managed through interest rate swap contracts and interest rate cap agreements[297]
NCR Voyix Corp(VYX) - 2024 Q3 - Quarterly Report