NCR Corporation

Good day and welcome to the NCR Corporation second quarter fiscal year 2023 earnings conference call. Today's conference is being recorded. At this time, I'd 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 second quarter 2023 earnings call. Joining me on the call today are Mike Hayford, CEO of Owen Sullivan, President and COO, Tim Oliver, CFO and CEO Designate of NCR Atlios, and David Wilkinson, President of our Commerce Business and CEO Designate of NCR Voyex. 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, 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 August 2, 2023, 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.

Thanks, Michael. I will begin with some of my views on the business, and I will also provide an update on our previously announced intention to separate NCR into two publicly traded companies. Tim will then review our financial performance, and then Owen, Tim, and I will take your questions. Let's begin on slide five with some of the highlights from the first quarter. First, NCR delivered strong performance that included solid recurring revenue growth and significant margin expansion, and delivered over 150 million of free cash flow, which has allowed us to de-lever prior to the spin. Second, we are on track to separate NCR into two public companies in the fourth quarter of 2023. Following Tim's comment on our financial results, I will provide an update on those separation activities. Third, in the second quarter, we had slight year-over-year revenue growth on a constant currency basis and 5% recurring revenue growth also on a constant currency basis. It's important to note that the revenue growth would have been 4% year-over-year without the impact of shifting to subscription. Fourth, adjusted EBITDA increased 17% on a constant currency basis from the second quarter of 2022. Adjusted EBITDA margin expanded to 19.6% this quarter, which represents a 260 basis point increase from the second quarter of 2022. And finally, NCR generated $154 million in free cash flow in the quarter. Over the past three quarters, we have generated over $550 million in free cash flow, allowing us to reduce financial leverage ahead of the separation. Moving to the business update on slide six. We have strong momentum across all five of our business segments with progress against our strategic initiatives across all of our KPIs. In retail, we continue to deliver on our strategy to be the retail platform company of choice. During the second quarter, NCR achieved multiple platform lane wins as retailers choose the best path for them to the platform. The SaveMark companies, a California-based grocery store operating approximately 200 stores, selected Emerald as their next-gen point of sale. We also continue our market leadership position in self-checkout. RBR announced that NCR once again was the market share leader in self-checkout with more than twice the share of the next largest supplier. This marks the 20th consecutive year that NCR has been the market leader in self-checkout solutions. In hospitality, we continue to experience strong demand across our enterprise and SMB customers, In SMB, our payments attached rate for customers remains approximately 90%, driving a 45% increase in payment sites. In Enterprise, Firebird's wood-fired grill chose the NCR Aloha for its point of sale. Aloha, with the NCR Commerce platform, will provide a cloud-based solution to transform and connect all of Firebird's fine dining restaurants across 21 states. In digital banking, we continue to have positive momentum. In the second quarter, digital banking sales activity was strong with nine new customer deals and 18 digital banking renewals. We also continue to experience strong cross-sell slash upsell momentum. In the second quarter, Synovus, which has over $60 billion in assets, renewed its digital banking relationship with NCR and added the Terafina Small Business Deposits module. In payments and network, we are making progress in both merchant acquiring and the all-point network. North America ATM withdrawals and cash dispense continue to increase and remain at a six-year high. International market expansion continues to accelerate. During the second quarter, we signed an agreement to deploy NCR's cash zone ATMs and provide access to cash for travelers in the Barcelona airport, which is one of the busiest airports in Europe. In self-service banking, we continued our momentum in our ATM as a service solution. Interest in our offering is accelerating from both community banks and large FIs globally. In the second quarter, we signed 10 new ATM as service deals, including Kiwi Bank and Union Bank of the Philippines. UIP is transferring operational maintenance and management of its ATM fleet, which includes over 400 ATMs to NCR. The bank will increase operational efficiencies while strengthening compliance and security. And the Seacoast Bank, which streamlined operations with NCR's ATM as a service solution, also extended customers' access to cash by joining the Allpoint network. With that, let me pass it over to Tim.