NCR Corporation

Good day and welcome to the NCR Corporation first quarter fiscal year 2022 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Nelson, Treasurer and Vice President of Investor Relations. Please go ahead.

Good afternoon and thank you for joining our first quarter 2022 earnings call. Joining me on the call today are Mike Hayford, CEO, Owen Sullivan, President and COO, and Tim Oliver, CFO. Before we get started, let me remind you that our presentation and discussions will include forward-looking statements. These statements reflect our current expectations and beliefs and but they're subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in our earnings release and our periodic filings with the SEC, including our annual report. On today's call, we'll also be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials. The press release dated April 26, 2022, and on the investor relations page of our website. A replay of this call will be available later today on our website, ncr.com. With that, I would now like to turn the call over to Mike.

All right. I'm assuming by now you have seen our numbers for the quarter. And while the external macro impacts resulted in disappointing financial results, our teams continued to execute in the business segment. And overall, I would say our first quarter was very good, with strong sales contributing to build order backlog, competitive wins, strategic transformation momentum, and execution on our KPIs. Inflation, interest, pandemic, and war all impacted us in the first quarter and caused us to miss our expected numbers. Tim will cover more specifics later, but let me give you a high level. Acceleration of costs led by microprocessors, fuel, and shipping costs impacted us in the first quarter. We think many of these impacts will be mitigated throughout the year by things we can control, prices, and or cost actions. Interest rates moved quickly in the first quarter. We don't see this improving during 2022, so we'll have to address costs elsewhere. The Omicron strain caused impact to transaction volumes as numerous countries slowed down during the first quarter. We have already started to see improved volumes in the second quarter. And lastly, the war in the Ukraine has impacted our business in Ukraine and Russia. Tim will cover the impacts and actions we are taking. The bulk of the financial impacts were due to the inflationary cost pressures and the Omicron impacts. On slide four, over the past three years, we have successfully balanced transforming NCR into software-led as a service company while continuing to deliver on our quarterly financial performance. During the first quarter, we continue to focus on that balance. In the first quarter, NCR made significant progress against our strategic initiatives with strong execution across our KPIs. Despite the significant challenges we faced, our teams executed extremely well and delivered to our customers. In quarter one, NCR delivered 21% total revenue growth with recurring revenue growth of 35%. Adjusted EBITDA increased 5%. Importantly, we are experiencing strong customer demand for solutions across our business segments and continue to successfully transform NCR into a software-led as-a-services company with a higher shift to recurring revenue streams. Now moving to the business update on slide five. We have had strong momentum across our strategic growth platforms, which support our company transformation. In payments and network, we are making progress against both merchant, acquiring, and the Allpoint network. We are seeing an accelerating number of merchant applications for integrated payments. In the first quarter, we also extended our Allpoint network with key merchant partners, most notably Circle K, which expanded its relationship with NCR with the addition of more than 650 locations across 13 states. We are also expanding NCR Pay360, which provides nationwide cardless access to NCR Cash Endpoints, and through strategic partnerships, NCR Pay360 facilitates money transfer for nearly any business vertical. NCR Pay360 also brings more transaction types, including digital currency solutions and the ability to buy and sell cryptocurrency at NCR Cash Endpoints. In digital banking, we continue to have positive momentum. In the first quarter, digital banking had 23 renewals and a new logo deal and the continued expansion of Terafina with three new clients for our online digital account opening platform. In self-service banking, we continued momentum in the transformative shift to software-based solutions, which deliver recurring revenue. We are also receiving increased interest in our ATM as a service solution, and integrate a go-to-market model combining the NCR and Cartronics teams' capabilities that provides a key point of competitive differentiation. In the first quarter, we secured four new ATM of the Service customers, including Directions Credit Union, which is embracing NCR's ATM of the Service to enhance and modernize their member experience. We are helping Saudi National Bank deliver a richer customer experience with our enterprise ATM software suite, providing targeted interactions and increased efficiencies. In retail, we have positive momentum in winning the upgrade imperative for retail point-of-sale solutions. NCR was named the world's largest POS software provider for the fifth consecutive year by RBR. During the quarter, we began deploying NCR FreshUp at Big Y to be used as the front end of Big Y's micro-fulfillment center. This SaaS solution helps grocers implement their own e-commerce and delivery services through the NCR commerce platform. In self-checkout, we're also seeing continued adoption with our market-leading solutions, including the supermarket retailer Kohl's, based in Australia, who recently refreshed their self-checkout estate. In hospitality, we continue to attract new customers and cross-sell to existing customers, including First Watch Restaurant Group, where we partnered on kitchen innovation technologies to better serve their staff and customers. We also continue to expand our strategic relationship with Noodles & Company, by adding additional services to our software platform. We saw increased momentum with our distribution partnership for our SMB product with a large bank in America through their merchant services division. And finally, I'll provide an update on our strategic review process, which is ongoing. Last call, we announced the initiation of a strategic review to enhance shareholder value. During the quarter, we hired advisors from B of A and Goldman Sachs, in addition to Evercore, and began a process to review strategic alternatives available to NCR to enhance shareholder value. We continue to evaluate a number of different paths and have made good progress to date. With that, let me pass it over to Tim.