NCR Voyix Corporation

Greetings, and welcome to the NCR Voyex First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alan Katz, Vice President of Investor Relations. Thank you, sir. You may begin.

Good morning, and thank you for joining our first quarter 2024 earnings conference call. This morning, we issued our earnings release reporting financials for the quarter ended March 31st, 2024. A copy of the earnings release and the presentation that we will reference during this call are available on the investor relations section of our website, which can be found at www.ncrvoyax.com and have been filed with the SEC. With me on the call today are David Wilkinson, our Chief Executive Officer, and Brian Webb Walsh, our Chief Financial Officer. This call is being recorded and the webcast is available on the investor relations section of our website. Before we begin, please be advised that remarks today will contain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. In addition, we will be discussing or providing certain non-GAAP financial measures today, which we believe are more reflective of our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call, the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our form 8K filed this morning and our supplemental materials available on the investor relations section of our website. With that, I would like to now turn the call over to David.

Thank you, Alan, and welcome everyone to our first quarter 2024 earnings call. For the quarter, We delivered revenue and adjusted EBITDA in line with expectations. Normalized software and services revenue grew 5% as we continued to onboard new and existing customers to our commerce and digital banking platforms. We executed on our transformation initiatives and saw the impact of the continued growth within our higher margin revenue streams. We achieved solid sales results across our segments, including signing nearly 300 new customers and expanding with existing customers. I'll provide more detail on our sales activity and our segment updates. We also continued converting customers to our platform and now have a total of approximately 61,000 retail and restaurant platform sites, approximately 18% of our total customer sites. The ongoing execution of our platform strategy, coupled with our increased investments in our global sales and services network, drove total segment ARR growth of 5% and software ARR growth of 6%. Let's turn to our restaurant segment slide on slide six. In the first quarter, we signed more than 230 new customers and increased our platform and payment sites by 6% and 26% respectively. Segment ARR grew 5% in the first quarter. In our enterprise business, we announced a new multi-year agreement with Prest, one of the leading fresh juice brands in the US with more than 100 locations and a growing e-commerce and wholesale business. Under our agreement, we will provide a full suite of solutions, including point of sale, back office, e-commerce, loyalty, and payments, which simplifies their operations and reporting across their physical and digital channels. Further, our integrated consumer marketing solution will run the Prest loyalty and marketing program both in stores and online. Prest moved from a smaller provider to our platform allowing to engage with their end users and improve the guest experience, while also driving efficiencies for their organization. In addition to signing new customers, we renewed and expanded with our existing restaurant customers this quarter, including a leading restaurant conglomerate in the U.S. who has been an NCR Voyex customer for more than 20 years. This customer has increasingly utilized our commerce platform across their footprint of approximately 600 restaurants to improve their digital guest experience and increase customer satisfaction. In 2023, we began providing real-time data and menu cataloging for this customer. In Q1 of this year, we further expanded our agreement to enable this customer to better serve their patrons ordering outside of the restaurant and deliver an experience that matches their brand promise of exceeding guest expectations. We're seeing traction in our mid-market growth efforts, signing new logos and expanding with existing customers. We continue to execute against our payments-led strategy for new mid-market customers, demonstrated by our 90 plus percent attach rate this quarter. We are growing our sales team, simplifying the sales and onboarding process, and improving our pricing and packaging, which will accelerate growth for this business. Let's move on to our retail segment on slide seven. This quarter we signed more than 50 new small and mid-market customers and four enterprise customers, leading to more than 800 additional sites. We also increased our platform sites by nearly 57% as we continued to convert on-premise customers and onboard newly signed customers to our commerce platform. Segment ARR grew 5% and software ARR grew 10%, attributed to the powerful impact of attaching to the platform. One example of this is a multi-year expansion and renewal we signed with Sainsbury's, one of the largest grocery chains in the UK with over 1,700 store locations. For more than two decades, we have provided Sainsbury's with our on-premise point-of-sale software solution and self-checkout technology with related services. Last month, Sainsbury's implemented our data and analytics module as part of their expanded agreement. We're on track to connect their entire store footprint, which operates more than 22,000 lanes, to our commerce platform. As part of the contract in 2025, We will upgrade their point of sale and self-checkout software to our cloud-based and in-lane solutions. Sainsbury's commitment to our cloud-native platform solution will drive a payback on their investment in less than two years and drive incremental recurring revenue and adjusted EBITDA for our business over the life of the contract. We're excited to continue our strategic partnership to eliminate in-store complexity and deliver an enhanced guest experience. While platform conversions with enterprise customers often have longer sales cycles and take time to deploy, once implemented, they are accretive to revenue and margin and create a return on investment for our customers. Sainsbury's is a great example of how a customer can realize a fast payback on its investment when converting to the platform. Our retail customers are increasingly focused on providing choice as part of the guest experience, which is accelerating interest for our next-generation self-checkout solutions. For example, this quarter, we expanded our self-checkout contract with the leading global e-commerce retailer that I highlighted on our last call. We weren't even finished with the initial rollout when this customer doubled the number of self-checkout sites and contracted to implement our next-gen solution for the remaining installations. We also expanded our relationship with the Navy Exchange, an existing point-of-sale customer, and will now be deploying self-checkout across 40 of their stores throughout the U.S., with the potential to expand to additional stores over time. We were able to expedite this expansion as a direct result of a recommendation from another government customer, the Army and Air Force Exchange, based on their experience as an NCR VOIC self-checkout technology and services customer. Let's move on to slide eight. Our digital banking segment demonstrated strong financial and operational performance this quarter. Our registered users grew 5% to more than 28.5 million and the number of active users grew 3% to more than 19.7 million, while segment ARR increased 7%. In 2024, we have taken steps to now align the organizational structure and operating model of our digital banking business with our growth strategy. We've built out our senior leadership team and have consolidated our four business lines into a single organization, streamlining our operations and simplifying our go-to-market. Although our realignment is in its early stages, we have already been able to drive greater sales activity and are realizing cost efficiencies. Further, we have reduced our capital investment without sacrificing research and development capacity, product innovation, or speed to market in our platform products and solutions. In the first quarter, we expanded our relationships with over 200 existing customers selling additional products and solutions. We continue to unlock ARPU and ARR growth in the largest customer base in the digital banking industry. One notable expansion was with a tier one retail bank that will now use our platform to serve an additional portion of their customer base and further increase cost efficiencies for their business. Today, 13 of the 15 largest retail banks in the US utilize our digital first platform. In addition to expanding our existing relationships, We also signed five new financial institutions this quarter, further expanding our industry-leading client roster. For example, we signed a contract with Apple Bank, the largest state chartered savings bank in New York, with over 80 branches and $17 billion of assets under management. Apple Bank selected us given the strong value proposition of our comprehensive digital-first platform, our differentiated end-user experience, and the potential to drive efficiencies leveraging our technology. I would now like to provide an update on our platform offerings. As we continue to invest in and improve our products and services, we will aim to strengthen our customer relationships and capture additional market share. Beginning with NCR Voyex Loyalty, our proprietary integrated customer marketing solution that allows better personalization and drives incremental revenue by combining customer data, offer management, and direct marketing into a single application. Prest is a recent example of the increasing demand we are seeing for this solution. As mentioned earlier, our next-generation self-checkout solution delivers a more seamless checkout experience to both new and existing retail customers. Retailers continue to focus on improving the guest experience and adopting operational efficiencies in the face of a challenging labor market. To that end, we have launched our next-gen self-checkout with over 15 customers, including Sainsbury's, to provide retailers more agility and flexibility to improve guest experience. Based on this initial demand, we expect a broader set of customers to accelerate their implementation of this advanced technology over the next several quarters, driving additional growth for our retail segment moving forward. We also have agreements with several third parties that enhance our offering for our restaurant, retail, and digital banking customers. These third-party applications leverage the cloud-based architecture of our platform and generate either transaction-based or recurring revenue with healthy margins. For restaurants, we are leveraging technology from Sunday to expand our pay-at-table capabilities, enabling servers to manage more tables simultaneously. As you've seen in our recent press release, we have expanded our partnership with Olo to bring new capabilities and integrated offerings to our enterprise customers. In retail, we are partnering with Everseen to help mitigate shrink by offering AI-enabled EverCheck technology for self-checkout. Within our digital banking business, we have partnered with MX Technologies to offer personal financial wellness tools and support. I would like to reiterate my confidence in our ability to execute on our growth strategy of signing new customers and converting existing customers to our platform, capitalizing on our unrivaled market position. We are prudently investing across our business to drive software and services revenue and enhance our products and services further extending our runway for growth. With that, I will turn it over to Brian, who will take you through the Q1 financial results in more detail and our outlook for the remainder of 2024.