NCR Atleos (NATL) - 2025 Q2 - Quarterly Report

Part I Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements for Q2 and H1 2025, showing increased net income Condensed Consolidated Statements of Operations Q2 2025 revenue grew to $1.104 billion with net income of $45 million, while H1 net income more than doubled to $60 million Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $1,104 | $1,080 | | Income from Operations | $120 | $108 | | Net Income Attributable to Atleos | $45 | $30 | | Diluted EPS | $0.60 | $0.41 | H1 2025 vs H1 2024 Performance (in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total Revenue | $2,083 | $2,129 | | Income from Operations | $214 | $180 | | Net Income Attributable to Atleos | $60 | $23 | | Diluted EPS | $0.80 | $0.31 | Condensed Consolidated Balance Sheets Total assets reached $5.814 billion, with liabilities at $5.462 billion and stockholders' equity improving to $352 million Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,976 | $1,758 | | Total Assets | $5,814 | $5,544 | | Total Current Liabilities | $1,887 | $1,707 | | Total Liabilities | $5,462 | $5,293 | | Total Stockholders' Equity | $352 | $251 | Condensed Consolidated Statements of Cash Flows Operating cash flow was $100 million, a decrease from prior year, with investing activities at $(37) million and financing at $(66) million Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $100 | $157 | | Net Cash used in Investing Activities | $(37) | $(71) | | Net Cash used in Financing Activities | $(66) | $(30) | | Cash at End of Period | $650 | $630 | Notes to Condensed Consolidated Financial Statements Detailed notes cover accounting policies, segment data, $2.9 billion debt, shared liabilities, and a $200 million share repurchase program Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Q2 2025 revenue grew 2% to $1.1 billion, Adjusted EBITDA rose 4% to $205 million, supported by strong liquidity and a new $200 million share repurchase program Overview Atleos, a financial technology company, is transitioning to an ATMaaS recurring revenue model while managing macroeconomic pressures and seasonality - The company's strategy is to become a cash-generative business focused on delivering ATMaaS and shifting to a highly recurring revenue model to drive stable cash flow[181] - Atleos continues to incur one-time separation costs related to its spin-off from Voyix, which are expected to continue through at least fiscal year 2025[178] - The company is exposed to macroeconomic pressures including higher interest rates, increased logistics costs, and foreign currency fluctuations, as well as new U.S. import tariffs introduced in February 2025[186][187] Results of Operations Q2 2025 consolidated revenue grew 2% to $1.104 billion, with net income up 50% to $45 million, reflecting improved operational performance Consolidated Results - Q2 2025 vs Q2 2024 (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,104 | $1,080 | 2% | | Total Gross Margin | $253 | $251 | 1% | | Income from Operations | $120 | $108 | 11% | | Net Income | $44 | $29 | 52% | Consolidated Results - H1 2025 vs H1 2024 (in millions) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,083 | $2,129 | (2)% | | Total Gross Margin | $486 | $472 | 3% | | Income from Operations | $214 | $180 | 19% | | Net Income | $58 | $22 | 164% | - Recurring revenue represented 70.0% of total revenue in Q2 2025, down from 73.3% in Q2 2024[194] - Adjusted EBITDA increased 4% to $205 million in Q2 2025, with the margin expanding to 18.6% from 18.2% in the prior year[195] Financial Condition, Liquidity and Capital Resources Cash was $357 million, total debt $2.948 billion, with operating cash flow at $100 million and a new $200 million share repurchase program - The company's Board of Directors approved a new Share Repurchase Program on July 25, 2025, authorizing up to $200 million in common stock repurchases over 24 months[169][265] Liquidity Position as of June 30, 2025 (in millions) | Item | Amount | | :--- | :--- | | Cash and Cash Equivalents | $357 | | Total Debt | $2,948 | | Borrowing Capacity | $334 | Adjusted Free Cash Flow-Unrestricted (Non-GAAP) (in millions) | Period | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $100 | $157 | | Adjusted free cash flow-unrestricted | $(8) | $85 | Item 3. Quantitative and Qualitative Disclosures about Market Risk Market risks from foreign currency and interest rates are managed, with a 10% USD appreciation impacting hedges by $16 million - A hypothetical 10% appreciation of the U.S. Dollar would increase the fair value of the company's hedge portfolio by $16 million as of June 30, 2025[279] - A hypothetical 100 basis point increase in variable interest rates would increase pre-tax interest expense by approximately $4 million for Q2 2025[280] - The company's ATM vault cash rental expense is sensitive to interest rates. A 100 basis point rate increase would raise this expense by approximately $10 million for Q2 2025, excluding the impact of hedges[281] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The Company's principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of June 30, 2025[284] - No material changes were made to the internal control over financial reporting during the second quarter of 2025[285] Part II Item 1. Legal Proceedings Legal proceedings are detailed in Note 9, covering shared liabilities with Voyix, including environmental and class action lawsuits - Information regarding legal proceedings is detailed in Note 9 of the financial statements[287] Item 1A. Risk Factors No material changes to risk factors were reported since the 2024 Annual Report on Form 10-K - No material changes to risk factors were reported since the 2024 Annual Report on Form 10-K[288] Item 6. Exhibits Exhibits include Sarbanes-Oxley certifications and financial statements in iXBRL format - Exhibits filed include certifications pursuant to Sarbanes-Oxley Act rules and financial data in iXBRL format[293]