NCR Voyix Corp(US:VYX)2021-10-27 01:26Financial Data and Key Metrics Changes - NCR Corporation reported a total revenue growth of 20%, reaching $1.9 billion, with a significant increase in recurring revenue by 39%, which now represents 62% of total revenues compared to 53% a year ago [8][22][23] - Adjusted EBITDA increased by 41% to $352 million, with an adjusted EBITDA margin expanding to 18.5%, marking the highest level in four years [9][24] - Free cash flow generated in the quarter was $125 million, marking the sixth consecutive quarter of positive free cash flow [9][25] Business Line Data and Key Metrics Changes - In the banking segment, revenue increased by 35% year-over-year, driven by software and services revenue, while ATM hardware revenue declined [26] - Digital banking grew by 9% year-over-year, with 22 renewals and three new logo deals in the third quarter [11][28] - The retail segment saw a slight revenue decline of 1% year-over-year due to lower hardware revenue, but recurring revenue increased by 4% [33] - The hospitality segment experienced a revenue increase of 29% as restaurants reopened, with a 46% increase in signed subscription total contract value [34] Market Data and Key Metrics Changes - Cash transactions on NCR's ATMs in the U.S. increased by 12% compared to the third quarter of 2020, indicating strong transaction growth [30] - The company noted strong demand for its self-checkout solutions, with expectations for a double-digit growth rate in total self-checkout revenue for the full year [87] Company Strategy and Development Direction - NCR is transitioning to a software platform and payments company, focusing on increasing recurring revenue streams and improving profit margins [6][10] - The integration of Cardtronics is on track, with expectations to accelerate the NCR-as-a-Service strategy and shift revenue mix towards software services [10][44] - The company aims to generate 80% of its revenue from software and services and 60% from recurring revenue, with current figures at 76% and 62% respectively [37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the supply chain, with an estimated $100 million in cost pressure for the year, but expressed confidence in managing these challenges [51][82] - The company expects to see a sequential increase in hardware revenue in Q4, despite ongoing supply chain constraints [42][60] - Management remains optimistic about the growth trajectory of digital banking and the overall stability of the business [76] Other Important Information - NCR's management emphasized the importance of customer satisfaction and the need to adapt to supply chain challenges collaboratively with clients [70][80] - The company plans to hold a virtual Investor Day on December 9 to provide updates on strategic goals and performance [46][92] Q&A Session Summary Question: Impact of supply chain issues on revenue and operating profit - Management indicated that supply chain-related cost pressures could amount to approximately $100 million for the year, with a significant portion expected in Q4 [51][52] Question: Contribution of Cardtronics to revenue and EBITDA - Management did not break out Cardtronics' specific figures but noted that the banking segment grew about 3% on a pro forma basis [58] Question: Backlog growth and future orders - Management confirmed that there was no significant backlog growth and that they are managing customer expectations regarding delivery timelines [59][60] Question: Adjusted EBITDA margins and pricing strategies - Management stated that the adjusted EBITDA margin of 18.5% was achieved despite supply chain pressures, and they are implementing pricing strategies to offset costs [68][73] Question: Digital banking growth and potential air pockets - Management expressed confidence in the stability and growth of digital banking, with no anticipated delays in implementation cycles [76] Question: Customer conversations regarding self-checkout solutions - Management noted increased demand for self-service solutions driven by labor costs and the pandemic, with expectations for continued growth in this area [86]