Financial Data and Key Metrics Changes - Atlios reported revenue of $1.1 billion for the second quarter, with core top line growth led by traditional hardware revenue and service growth backlog conversion [10][29] - Adjusted EBITDA grew to $205 million, with a margin expansion of approximately 40 basis points year over year [30][40] - Non-GAAP fully diluted earnings per share increased by 9% year over year to $0.93 [31] Business Line Data and Key Metrics Changes - The self-service banking segment saw revenue growth of 9% year over year, reaching $733 million, driven by a 21% increase in hardware deliveries [32] - The ATM as a Service business experienced a 32% revenue growth, with significant increases in unique customers and a favorable mix shift to higher margin geographies [36] - The network segment revenue was down 2% year over year to $320 million, primarily due to lower cash withdrawal transactions [38] Market Data and Key Metrics Changes - The company reported a backlog increase of 105% year over year, setting a strong foundation for future growth [53] - Cash deposit transactions grew by 170% year over year in the U.S. retail portfolio, indicating strong demand for utility deposit services [40] - The adjusted EBITDA margin for the network segment was 27%, reflecting the impact of increased bulk cash costs [40] Company Strategy and Development Direction - Atlios aims to grow efficiently, prioritize service, and embrace simplicity as part of its strategic objectives for 2025 [13][24] - The company is focused on expanding its installed base and enhancing service offerings to drive future revenue growth [22][70] - A $200 million share repurchase program has been authorized to enhance shareholder value while balancing debt reduction [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance despite ongoing tariff uncertainties and macroeconomic challenges [47] - The company anticipates continued growth in free cash flow and a reduction in net leverage to below three times by the third quarter [27][44] - Management highlighted the importance of customer satisfaction and service performance improvements as key drivers of future growth [56][70] Other Important Information - The company has successfully transitioned to a pure-play independent entity following its separation from legacy NCR [22][24] - The focus on product innovation and operational efficiency is expected to enhance competitive positioning in the market [14][22] Q&A Session Summary Question: Can you talk about the average ARPU in the as-a-service backlog and its trend? - The average ARPU in the backlog is approximately $9,100, with over 8,000 units currently in backlog [51] Question: Can you quantify the as-a-service backlog? - The backlog is up 105% year over year, indicating strong momentum for the business [53] Question: Can you provide metrics on service performance improvements? - Customer health scores have increased by 160 basis points, reflecting enhanced service levels and customer satisfaction [15][56] Question: What is the company's vision for the next two to three years? - The company aims to leverage its unique capabilities to provide both shared financial utility and bank-specific fleet solutions, driving predictable and high free cash flows [70] Question: How does the company view the impact of tariffs on hardware? - Hardware revenue is approximately $800 million, and while tariffs are a concern, the company believes it can manage costs effectively and maintain competitiveness [74][80]
NCR Atleos (NATL) - 2025 Q2 - Earnings Call Transcript