NCR Voyix Corp(US:VYX)2022-07-28 00:33Financial Performance and Key Metrics Changes - The company reported a total revenue of $2 billion, representing a 23% year-over-year growth on a constant currency basis [27] - Recurring revenue grew by 35% on a constant currency basis [28] - Adjusted EBITDA increased by 26% year-over-year, reaching $339 million [28] - Adjusted EBITDA margin expanded to 17%, a 250 basis point increase from the first quarter of 2022 [9][28] - Non-GAAP EPS was $0.71, up 15% year-over-year, with a negative impact of approximately $0.07 from the strengthening U.S. dollar [29] Business Line Data and Key Metrics Changes Payments & Networks - Revenue increased by $278 million or 515% year-over-year, driven by the acquisition of Cardtronics [32] - Adjusted EBITDA increased by 411% year-over-year, with a margin rate of 29% [33] - Transactions processed remained flat year-over-year but increased by 8% from the first quarter of 2022 [35] Digital Banking - Revenue and EBITDA increased by 2% year-over-year, with an adjusted EBITDA margin of 43% [36] - Registered users decreased by 3% and active users declined by 5% year-over-year [36] Self-Service Banking - Revenue increased by $34 million or 5% year-over-year, with an adjusted EBITDA margin of 21% [39] - ATM as a service units increased by 3% year-over-year, with expectations to triple the number of units by year-end [41] Retail - Revenue was flat year-over-year but up 4% on a constant currency basis [42] - Adjusted EBITDA decreased by 14% year-over-year, but improved sequentially by 620 basis points to a margin rate of 19% [44] Hospitality - Revenue increased by $23 million or 11% year-over-year, with adjusted EBITDA up 18% [49] - Payment attach rate for hospitality reached approximately 90% for new SMB customers [47] Market Data and Key Metrics Changes - The company experienced strong customer demand across all business segments, particularly in integrated payments and digital banking [10][12] - The Allpoint network saw growth in transaction volume and new financial institution partnerships [12] Company Strategy and Development Direction - The company is focused on transforming into a software-led service company with a higher shift to recurring revenue streams [7] - The strategic review process is ongoing, aimed at unlocking value for shareholders [21] - The company is investing in working capital to support growth and mitigate supply chain disruptions [31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by high inflation, interest rates, and supply chain issues but expressed confidence in the company's execution and strategic initiatives [23][25] - The outlook for the full year remains unchanged, with expectations to hit the lower end of revenue and EBITDA guidance despite foreign exchange headwinds [26][72] Other Important Information - Free cash flow was flat, with significant investments in working capital to insulate customers from supply chain disruptions [31] - The company ended the quarter with $398 million in cash and significant liquidity available under its revolving credit facility [52] Q&A Session Summary Question: Follow-up on outlook and revenue guidance - Management indicated that foreign exchange pressures could reduce revenue by approximately $170 million in the second half, but they believe they can still reach the lower end of the guidance range [56][57] Question: Supply chain improvements - Management noted that while supply chain conditions have not worsened, they have implemented creative solutions to mitigate costs and improve component sourcing [59][60] Question: Pricing and cost headwinds - Management discussed the impact of inflation and interest rates on EBITDA margins, indicating ongoing efforts to manage costs and implement pricing actions [63][66] Question: Backlog and sales activity - Management confirmed that sales activity remains strong across all business lines, with continued growth in hardware and software services [75][77] Question: Free cash flow expectations - Management expressed confidence in converting inventory to cash in the latter half of the year, aiming to achieve the low end of the free cash flow guidance [80][81] Question: Competitive positioning and supply chain management - Management highlighted their ability to manage supply chain challenges as a competitive advantage, ensuring customer commitments were met despite disruptions [89][90] Question: Regional bank demand and ATM services - Management reported no significant changes in buying behavior from regional banks, with a growing interest in ATM as a service offerings [106][110]