NCR Voyix Corporation

Greetings and welcome to NCR VOIC's first quarter 2025 earnings call. At this time, all participants are on a listen-only mode. A 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. I would now like to turn the call over to your host, Sarah Jane Schneider. Thank you. You may begin.

Good morning and thank you for joining our first quarter 2025 earnings conference call. This morning we issued our earnings release reporting financials for the quarter and in March 31st, 2025. 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.ncrvox.com and have been filed with the SEC. With me on the call today are Jim Kelly, our Chief Executive Officer, Brian Webb Walsh, our Chief Financial Officer, Benny Tadele, President, Restaurants, Darren Wilson, President, Retail, and Nick East, our Chief Product 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, 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 will provide additional clarity regarding our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our form 8K file this morning and our supplemental materials available on the investor relations section of our website. With that, I would now like to turn the call over to Jim.

Thanks, S.J., and good morning, everyone. I would like to welcome all of you to our first quarter earnings call. Before beginning, I would like to introduce Nick East, our Chief Product Officer. As you saw in our press release, Nick will oversee product innovation and marketing across the company's platform architecture. In his new role, Nick will direct our investments in platform solutions to meet the growing demands of our customers and the market. Further, we now have two executives based outside the United States, which will provide a broader perspective of international trends and bring us closer to our global customer base. Turning to our recent performance, this quarter we signed new mid-market and enterprise customers in both our restaurant and retail segments, expanded key existing relationships, and signed customers to the platform. We also progressed on implementing our hardware ODM and our new card acquiring capabilities. While our results were in line with expectations, Work remains as we accelerate deployments, transition hardware, and exit one-time revenue streams in favor of recurring subscription billing. As we will outline today's remarks, we are making progress on our cloud-native platform and payment initiatives, which will launch during the second half of this year and drive revenue growth leading into 2026. While early days, I am encouraged by the traction we are beginning to see on our growth initiatives to improve future performance. Since our last call, I have met with more than 40 of our largest customers across the US, Latin America, and Europe to gain constructive feedback and reinforce our commitment to excellence in software and services. Our market-leading position in restaurant and retail is backed by our unmatched global presence of marquee customers, and these relationships are key to both our current positioning and go-forward strategy. These customers are eager to learn about the platform strategy embedded in our next-generation solutions. Nick, Benny, and Darren will discuss our product execution later on the call. I will now provide an update on our hardware business, both as it relates to the recent tariff announcements and our ODM transition. In 2024, the U.S. market represented approximately 60% of our annual hardware sales as it pertained to self-checkout and point-of-sale hardware finished in Mexico. During the later part of the quarter, we began receiving tariff surcharges for certain service parts from a limited number of our China-based suppliers. This trend has continued but not accelerated into the second quarter. The current run rate of tariff-related cost is between $8 million and $12 million for the balance of the year, or up to $20 million if all suppliers implemented surcharges. In parallel, We have initiated actions to mitigate some of the impact by sourcing suppliers in markets where tariffs are lower or do not apply. As we said on the last call, the implementation of our ODM agreement with ENACOM is on track for pilot this summer and is expected to be operational by year-end. Our partners' area of focus since December has been the installation of a third-party application to manage the Nashville warehouse, which supports all markets outside of Europe. We will begin piloting across our markets later this summer and anticipate a full transition by year-end. Turning to payments, we're in the process of integrating WorldPay's front-end processing capabilities into our customer offering, anticipated to be operational by the end of the summer. As such, we have recently launched payments training for our sales teams to enable initial dialogue with existing customers not currently utilizing our payment solutions. Given the positive feedback that I've received from my customer meetings, I'm optimistic about our ability to both convert the base and attract new customers to our payment acceptance solution. As an example, while early days, we have recently renewed an enterprise restaurant customer who will leverage our new end-to-end payment offering once available. We will continue to work to operationalize our international markets over the next six to 24 months. Turning to our capital allocation priorities, in March and April, we completed an additional $25 million of share repurchases amounting to 2.6 million shares under our existing program. Since the beginning of the repurchases in November, we have repurchased approximately 10 million shares for a total of $125 million. Our board recently adopted an amended share program, which increased the total aggregate purchase authority under the company's share repurchase program to $200 million. The company will consider the timing of buybacks together with other uses of cash, such as investments in products and infrastructure. Lastly, before I turn the call over to Nick, I would like to provide context for our Voyage Commerce platform strategy. For more than 20 years, the company has acquired over 40 on-premise software applications, most of which are still in use today, serving our restaurant and retail customers. In 2019, the company shifted its product strategy from acquiring third-party applications to developing in-house cloud architecture and edge microservices to deliver platform benefits to our customers. This was the genesis of the Voyex Commerce Platform, or VCP, initially developed with capabilities to connect legacy applications to the cloud. Later this year, we will begin launching VCP's cloud-native and edge applications to existing and new customers as we sunset the sale of our legacy on-prem applications. The VCP will enable our customers to transform their physical locations into digital experience channels for shoppers and diners. We are excited about the potential of a platform-powered business to mutually accelerate growth for our customers and for NCR Voyages. To ensure this remains central to the company's transformation, we have appointed Nick East to lead our product strategy under VCP.