Revenue Performance - Total revenue for Q3 2025 increased by 4% to $1,121 million compared to $1,073 million in Q3 2024[178]. - Total revenue for the three months ended September 30, 2025, was $1,121 million, reflecting a 4% increase from $1,073 million in the same period of 2024[178]. - For the nine months ended September 30, 2025, total revenue was $3,202 million, slightly up from $3,197 million in the same period of 2024[178]. - Consolidated revenue for the three months ended September 30, 2025, increased by 4% to $1,121 million compared to $1,073 million in 2024, driven by a $62 million increase in core business segment revenues[195]. - Consolidated revenue for the nine months ended September 30, 2025, was flat at $3,202 million compared to $3,197 million in 2024, with core business segment revenue increasing by 3%[196]. Recurring Revenue - Recurring revenue for Q3 2025 was $783 million, representing 69.8% of total revenue, a decrease from 73.2% in Q3 2024[178]. - Annualized recurring revenue (ARR) increased to $1,712 million in Q3 2025 from $1,645 million in Q3 2024, representing a growth of 4.1%[180]. - Recurring revenue as a percentage of Self-Service Banking (SSB) revenue decreased to 57% in Q3 2025 from 61% in Q3 2024[180]. Net Income and Profitability - Net income attributable to Atleos for Q3 2025 was $26 million, a 24% increase from $21 million in Q3 2024[179]. - Net income attributable to Atleos for Q3 2025 was $26 million, a 30% increase from $20 million in the same period of 2024[193]. - Net income attributable to Atleos for the nine months ended September 30, 2025, was $79 million, a 103% increase compared to $39 million in 2024[179]. EBITDA and Margins - Adjusted EBITDA for Q3 2025 was $219 million, representing 19.5% of total revenue, up from 19.1% in Q3 2024[179]. - Adjusted EBITDA for the three months ended September 30, 2025, was $219 million, representing an adjusted EBITDA margin of 19.5%[188]. - Adjusted EBITDA rose by 21% to $196 million for the three months ended September 30, 2025, compared to $162 million in the prior year[216]. - Adjusted gross margin rate for Q3 2025 was 26.5%, compared to 26.1% in Q3 2024[190]. - Total gross margin for Q3 2025 improved to 24.2%, up from 23.9% in Q3 2024[193]. Expenses - Selling, general and administrative expenses for the three months ended September 30, 2025, increased by 13% to $143 million, representing 12.8% of total revenue[199]. - Research and development expenses increased by 20% to $18 million in Q3 2025 from $15 million in Q3 2024[193]. - Research and development expenses for the nine months ended September 30, 2025, increased by 21% to $52 million, accounting for 1.6% of total revenue[202]. - Interest expense decreased to $68 million in Q3 2025 from $79 million in Q3 2024, a reduction of 14%[193]. Cash Flow and Debt - Cash provided by operating activities decreased by $139 million to $125 million for the nine months ended September 30, 2025, compared to $264 million in the prior year[229]. - As of September 30, 2025, cash and cash equivalents totaled $412 million, while total debt stood at $2,912 million[238]. - The company has a borrowing capacity of $348 million under its Revolving Credit Facility as of September 30, 2025[238]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $125 million, compared to $264 million for the same period in 2024[242]. - Adjusted free cash flow-unrestricted for the nine months ended September 30, 2025, was $114 million, slightly down from $123 million in 2024[242]. Strategic Initiatives - The company aims to shift towards a highly recurring revenue model to drive stable cash flows and returns to stockholders[165]. - Atleos is focusing on expanding its ATMaaS offerings to meet global demand for ATM access and digital currency solutions[165]. - The company expects to utilize cash flows to invest in business growth strategies and repay indebtedness over time[240]. - The company has a share repurchase program authorized for up to $200 million over 24 months, with no repurchase activity reported during the three and nine months ended September 30, 2025[237]. Macroeconomic Factors - The company is navigating macroeconomic pressures, including higher interest rates and increased logistics costs, which may impact business performance in the short term[170]. - The company emphasizes the importance of generating positive cash flows from operations, which are subject to economic conditions and competitive environment[239]. Spin-off and Corporate Structure - The spin-off from NCR Corporation was completed on October 16, 2023, establishing Atleos as a standalone publicly-traded company[162]. - The company expects to continue incurring one-time separation costs related to the spin-off, projected to last through at least fiscal year 2025[163]. Revenue Breakdown - Product revenue rose to $274 million in Q3 2025, up 17% from $234 million in Q3 2024, while service revenue increased slightly to $847 million[193]. - Self-Service Banking revenue for the nine months ended September 30, 2025, rose by 7% to $2,099 million from $1,967 million in 2024, contributing 65.6% of total revenue[196]. - Self-Service Banking revenue increased by 11% to $744 million for the three months ended September 30, 2025, compared to $672 million in the prior year[215]. - Hardware revenue surged by 25% to $235 million, driven by demand related to the industry refresh cycle[215]. - Network revenue decreased by 1% to $328 million for the three months ended September 30, 2025, primarily due to a decline in withdrawal volumes[219]. - Telecommunications & Technology (T&T) revenue fell by 13% to $40 million for the three months ended September 30, 2025, due to decreases in hardware maintenance and installation revenue[223].
NCR Atleos (NATL) - 2025 Q3 - Quarterly Report