NCR Voyix Corp(US:VYX)2023-11-13 16:00Revenue Performance - Revenue for Q3 2023 was $2,017 million, a 2% increase compared to the same period last year[209]. - Recurring revenue increased by 7% year-over-year, accounting for 65% of total consolidated revenue[209]. - Total revenue for the three months ended September 30, 2023, increased by 2% to $2,017 million compared to $1,972 million in 2022[224]. - Total revenue for the nine months ended September 30, 2023, increased by 1% to $5,894 million compared to $5,835 million in 2022[225]. - Digital Banking revenue increased by 7% in Q3 2023, reaching $147 million compared to $137 million in Q3 2022[251]. - Payments & Network revenue increased by 6% in Q3 2023, totaling $357 million, due to higher margin ATM transactions[257]. - Self-Service Banking revenue grew by 4% in Q3 2023, totaling $666 million, driven by recurring ATM as-a-Service arrangements[258]. Segment Performance - The company will manage its operations using three reportable segments: Retail, Restaurant, and Digital Banking starting Q4 2023[201]. - Adjusted EBITDA for Hospitality segment increased by 16% in Q3 2023, reaching $59 million, compared to $51 million in Q3 2022[260]. - Retail Adjusted EBITDA rose by 3% in Q3 2023, totaling $132 million, attributed to a favorable revenue mix and cost improvements[259]. - Self-Service Banking Adjusted EBITDA increased by 13% in Q3 2023, reaching $169 million, primarily due to improvements in component and fuel costs[263]. - Digital Banking Adjusted EBITDA decreased by 3% in Q3 2023, totaling $58 million, impacted by increased selling and R&D expenses[261]. Profitability and Margins - Total gross margin for Q3 2023 was $627 million, a 28% increase from $491 million in Q3 2022[212]. - Gross margin for the nine months ended September 30, 2023, was 27.7%, up from 23.5% in the same period of 2022, benefiting from $85 million of unrealized gains on terminated interest rate derivative contracts[229]. - Adjusted EBITDA for the three months ended September 30, 2023, was $404 million, representing a 6% increase from $380 million in 2022[216]. - Adjusted EBITDA for the nine months ended September 30, 2023, was $1,095 million, an 11% increase from $990 million in 2022[216]. Expenses - Selling, general and administrative expenses for the nine months ended September 30, 2023, were $956 million, an 8% increase from $886 million in 2022, with the percentage of total revenue rising from 15.2% to 16.2%[233]. - Research and development expenses for the nine months ended September 30, 2023, were $164 million, a decrease from $175 million in 2022, with the percentage of total revenue increasing from 2.8% to 3.0%[236]. - Interest expense for the nine months ended September 30, 2023, was $259 million, a 27% increase from $204 million in 2022, primarily due to rising variable interest rates[240]. Cash Flow and Debt - Net cash provided by operating activities increased to $728 million for the nine months ended September 30, 2023, up from $245 million in the same period of 2022, driven by a favorable movement in net working capital accounts of $570 million[267]. - Adjusted free cash flow-unrestricted for the nine months ended September 30, 2023, was $421 million, a significant increase of $459 million compared to a negative $38 million in 2022[269]. - Total debt as of September 30, 2023, was $7.65 billion, with cash and cash equivalents totaling $675 million[285]. - The Senior Secured Credit Facility had an outstanding balance of $1.801 billion as of September 30, 2023, with an additional $438 million drawn from a five-year Revolving Credit Facility[272]. - On October 16, 2023, the company made a cash distribution of approximately $3.0 billion to repay all accrued and unpaid loans under the Senior Secured Credit Facility[278]. Strategic Initiatives - The company anticipates a focus on transforming into a software-led as-a-service company with a higher mix of recurring revenue streams[291]. - The company plans to continue advancing its strategic growth initiatives and expects to deliver increased value to customers and stockholders[291]. - The company has a strategy focused on transforming its business model and integrating acquisitions, which may take longer to realize than expected[293]. Risks and Challenges - The company continues to face macroeconomic pressures, including supply chain challenges and foreign currency fluctuations[207]. - The company faces risks related to data privacy and cybersecurity, including a ransomware incident in April 2023[296]. - The potential strategic benefits from the separation of the company may not be fully realized, impacting stockholder value[293]. - The company is managing its level of indebtedness and cash flow sufficiency to service its debt obligations[296]. Foreign Currency Exposure - The company experienced a 1% unfavorable impact from foreign currency fluctuations on total revenue for the nine months ended September 30, 2023[225]. - As of September 30, 2023, the company had exposure to approximately 45 functional currencies, impacting its results due to foreign currency exchange rate fluctuations[297]. - A 10% appreciation in the value of the U.S. Dollar against foreign currencies would decrease the fair value of the hedge portfolio by $32 million as of September 30, 2023[299]. - The company hedges foreign currency risks primarily through forward and option contracts related to inter-company inventory purchases[297].