NCR Voyix Corporation

Greetings and welcome to the NCR-VOIC second quarter 2025 earnings call. At this time all participants are in 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'd now like to turn the call over to your host, Sarah Jane Schneider, Vice President of Invest Relations. Thank you. You may begin.

Good morning and thank you for joining our second quarter 2025 earnings conference call. This morning we issued our earnings release reporting financials for the quarter and on June 30, 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 .ncrvoic.com and have been filed with the SEC. With me on the call today are Jim Kelly, our Chief Executive Officer, Brian Webwalsh, our Chief Financial Officer, Benny Tadele, President of Restaurants, Darren Wilson, President of 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 and according to the 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. Jim?

Thanks, Sarah Jane, and good morning, everyone. I would like to welcome you all to our second quarter earnings call. I will begin with a summary of our recent performance. This quarter, we continued to execute on our key initiatives, winning new customers in both our restaurant and retail segments, signing existing customers to the Voix Commerce platform, and getting additional interest in our latest cloud products and payment capabilities. I remain encouraged by the progress we are making and our ability to improve future performance. We will be launching additional VCP capabilities beginning in the fourth quarter and continuing into next year. In retail, we will be launching our enterprise grocery and convenience point of sale, self-checkout, and fuel at the NRF show in January. In restaurants, we'll be launching a new -in-one application for labor, inventory, reporting, and scheduling in the fourth quarter and our new centralized menu management solution in early 2026. For payments, we completed our pilot for Voix Pay in the U.S. in July and are on track to complete the migration of our existing SME portfolio and sign new customers directly to the processing platform by mid-September. We are already in active discussions with our existing mid-market enterprise customers to offer acquiring solutions not available on our legacy JetPay platform. We're also enabling acquiring in the UK, Canada, and Latin America as global payments acquisition of WorldPay provides us an even broader array of in-market capabilities. Based on contract renewal dates, we have initiated conversations with about 10% of customers thus far regarding our expanded services offering, including payments. Going forward, all new software contracts will be presented with our payment capabilities as the two industries have become increasingly intertwined. This will reduce vendor management complexity and potential store downtime while enhancing revenue opportunities for the company. Turning to hardware, we continue to progress on the implementation of our ODM agreement, which will commence by year end. Our pilot for our European markets is already underway and has met expectations thus far. At our Nashville facility, we are in the testing phase and expect the pilot for the Americas and Asia Pacific to begin next month. Since our call in May, there have been no material changes to the tariff related cost to our business, which we continue to estimate to be between 8 million and 12 million for the year. Given the ever evolving tariff situation, we are monitoring the potential impact to our business and will reassess our mitigation strategy to the extent circumstances change. In the six months that I've been in my role at the company, I've had the pleasure of meeting with more than 50 of our customers, gaining insights into our past performance and an understanding of their technology roadmaps. We seem well aligned on both fronts and our customers are eager to transform their guests and staff experiences, leveraging the VCP. Nick, Benny and Darren will now provide examples of our early success in implementing this go forward strategy. I'll now turn the call over to Nick to discuss our product updates.

Nick. Thanks, Jim. Good morning, everyone. At the end of the quarter, we had nearly 78,000 sites connected to the voice commerce platform, an increase of 16 percent year over year. As a reminder, the VCP was originally developed to connect legacy applications to the cloud and going forward, we will leverage its cloud architecture and edge microservices to deliver our voice point of sale and voice self checkout. We continue to execute on our platform and related product initiatives, including the developments and rollout of our cloud solutions, the continuous innovation of our microservices architecture and edge services and the connection of our legacy customers to the VCP. I'd like to discuss four key examples that illustrate this progress and the positive outcomes it is driving for our customers and our business. The first is consumer transaction volume flowing through the VCP. In the first half of 2025, volumes were more than 50 percent higher than the prior year and the VCP processed more than 500 million transaction API calls in June alone. This growth was driven by the increase in platform connected customers who benefit from greater real time visibility into end user purchasing behavior and the integration of these data flows into their business processes. The second is the number of consumer orders running through the VCP. This increased nearly 60 percent in the first half of 2025 compared to the prior year, with over 75 million orders processed this June, underlining the platform's performance, scalability and stability. The third highly innovative example is our existing customers rapid adoption of Picklist Assist, our AI enabled computer vision capability for self checkout. Available through the VCP, Picklist Assist utilizes computer vision via cameras already built into most of our grocery self checkout scanners to identify and present a short list of most likely items based on color, weight and other characteristics. This proprietary software technology can be used with both our legacy and cloud based checkouts to improve speed, accuracy and efficiency, enhancing outcomes for both retailers and their end customers. We've already implemented Picklist Assist across more than 22,000 checkout lanes worldwide and continue to see strong market interest in this feature. The fourth is the increasing adoption of our Edge virtualization solution that enables our customers to operate their stores with the speed and efficiencies of running their digital channels. This year, we have continued to implement Edge for major retailers to improve store outcomes. For example, during the quarter, one of our large Edge customers in Europe was able to address a business requirement to trial a new kiosk with a new hardware device and implement a working solution in less than two weeks. Edge not only significantly improved the speed to market of such an application by months, but also enabled them to bypass a lengthy certification process. Each of these examples, like our other VCP solutions, contributes towards software ARR growth from our platform sites and are normally packaged as an add-on to a point of sale or self checkout subscription. One of the biggest shifts we see in the market is the desire for enterprise brands to transform their stores to create modern experiences for shoppers and modern ease of IT teams that mirror their digital channels. Cloud-native technologies leveraging microservices, while common in digital commerce, are less so in brick and mortar stores. We have been investing in this type of software architecture for five years, and it is quickly becoming a compelling competitive advantage. With that, I will turn the call over to Benny to discuss our restaurants performance. Benny?

Thanks, Nick. In the second quarter, our restaurant business signed more than 200 new software and services customers. Our platform and payment sites increased 4% and 1% respectively. Software ARR increased 4% and total ARR increased 3% in the quarter. NCR Voice has long been a trusted partner for enterprise restaurants, and we continue to deepen our relationships and expand our product and services offering in the space. This year, we've made significant progress on our sales transformation efforts, including hiring Miguel Salares as the Senior Vice President and Chief Revenue Officer and other key sales leaders. We are already seeing meaningful improvements in our customer satisfaction, global expansion, and sales pipeline. This quarter, we expanded our long-standing services relationship with a large global coffee chain to provide enhanced drive-through support for their stores in the US and Canada. This follows our recent international expansion with this customer, as discussed on our Q3 call in November, and we expect to continue to broaden our services contracts with them over time. We also completed the services rollout for the large global fast food chain in the UK we announced on our February call, which will deliver strong recurring revenue for our business in the second half of the year. This is an example of the strength of our services division and its ability to support global brands with consistent high-quality solutions across geographies. We are continuing to expand our enterprise restaurant offering internationally, leveraging our existing global retail operations. Given Latin America's high software adoption at the point of sale, this region will be a focus as we drive the adoption of Aloha outside the US. Our retail business today has strong markets here in Mexico, Chile, Peru, and Argentina, and we are positioned to build a similar presence with restaurants over time. In addition to our enterprise expansion efforts, we're also enhancing our commitment to small and mid-market restaurants through direct and third-party relationships. Mid-market brands are increasingly looking for a scalable, -in-one platform. NCRVox delivers a true -a-box experience, combining -of-sale payments and operational tools to simplify technology for franchises and accelerate same-store growing. Our role to all services are especially resonating with operators who want enterprise-grade capabilities tailored to emerging brands. For example, we recently renewed agreements with several mid-market restaurants in the Southeast as they continue to leverage our extensive service capabilities to grow and scale their businesses. I will now turn the call over to Darren to discuss our retail performance. Darren?

Thanks, Benny. Good morning, everyone. In the second quarter, our retail business signed nearly 50 software and service customers. Our platform and payment sites increased 25% and 13%, respectively. Software ARR increased 9%, and total ARR increased 6% in the quarter. As previously mentioned, this quarter we continued to introduce our VCP applications to new and existing customers. For example, in Japan, we signed contracts with a national grocery chain and a large drugstore chain for both Vox -of-sale and self-checkout, displacing two separate competitors with our leading solutions. In the UK, we signed a five-year Vox -of-sale and self-checkout agreement with one of the fastest growing supermarket chains in the market and a long-standing customer of NCRVox. In addition to -of-sale and self-checkout, we will also provide hosting and loyalty solutions for their ,000-store footprint. Further, this is the third market-leading grocer in the UK to adopt our latest solutions. We have now signed agreements with more than 10 grocery, fuel, and convenience customers across North America, Europe, and Japan to implement Vox -of-sale and self-checkout and other cloud-based solutions across entire store estates through the end of next year. In services, we signed a new multi-year agreement with one of the largest discount department store chains to install back office and -of-sale hardware across nearly 4,000 sites in the US and Canada. We will look to expand our relationship with this customer over time. Lastly, in our government business, we recently signed an expanded agreement with a large, long-standing customer to provide more than 14,000 -of-sale terminals across their retail footprint. With that, I will turn the call over to Brian. Brian?

Thank you, Darren, and good morning, everyone. For the quarter, we delivered revenue and adjusted EBITDA in line with expectations. Total revenue of $666 million declined 8% due to continued softness in hardware sales. Recurring revenue increased 4% to $422 million and as a percent of total revenue improved over 700 basis points to 63%. Software ARR and total segment ARR increased 7% and 5% respectively. Platform sites increased 16% to 78,000 sites and payment sites increased 3% to 8,400 sites. Adjusted EBITDA of $95 million increased 20% in the second quarter as margin expanded 340 basis points to 14.3%. This was largely driven by our previously discussed cost actions. Let's turn to our segment results. Beginning with restaurants, recurring revenue increased 4% to $143 million and total segment revenue increased 2% to $205 million due to an increase in payments and recurring services revenue. Segment-adjusted EBITDA increased 10% to $68 million as margin expanded 240 basis points to 33.2%. This improvement was driven by our efficiency initiatives and our software and services sales mix. Turning to retail, recurring revenue increased 5% to $277 million driven primarily by the ramp of a new large customer agreement and platform revenue growth. Total segment revenue declined 12% to $454 million due to the previously mentioned decline in hardware sales. Segment-adjusted EBITDA decreased 7% to $81 million primarily due to the declines in hardware revenue, but absolute EBITDA improved sequentially from the first quarter. Segment-adjusted EBITDA margin of .8% expanded 100 basis points year over year. Lastly, corporate and other expenses decreased 23% to $54 million, which reflects the previously discussed cost initiatives. Adjusted free cash flow was $37 million for the quarter before considering $24 million of restructuring cash expenditures, $284 million of cash taxes related to the sale of digital banking, and $5 million of accelerated product investments. We invested $42 million in capital expenditures during the quarter and $81 million for the first half of 2025. Over 80% of CapEx was related to software investments. Our net leverage position was 1.9 times at the end of the second quarter based on our net debt as of June 30th and the midpoint of our full-year adjusted EBITDA outlook. Turning to our outlook, we continue to expect revenue to range from $2.575 billion to $2.65 billion, and adjusted EBITDA to range from $420 million to $445 million. Non-GAAP diluted EPS is expected to be between $0.75 and $0.80, and adjusted free cash flow is expected to be between $170 million and $190 million. With that, I'll turn the call back over to Jim for

closing remarks. Jim? In closing, I'm pleased with the commitment and progress the team has demonstrated in the first half of the year. More importantly, with the benefit of being in my new role for almost six months, I'm increasingly convinced that NCR VOIGS can advance the foundational strengths I've outlined on my first call in February. Our competitive positioning remains strong, and this is despite some past deficiencies in consistently demonstrating urgency and execution to some of our valued customers. I believe our collective efforts over the past six months are beginning to change perception in a positive way, which is reflected in our recent success in the market and our improving ARR performance. I'm encouraged by the cultural shift, together with our ongoing product innovation efforts, increased focus on our global service offering, enhanced payment strategy, and our ability to continue these efforts to deliver value for our customers and our shareholders. I'll now turn the call over to the operator to begin the question and answer section. Operator?

Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you reach to one question and one follow-up. Thank you. Our first question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed with your question.

Thanks. Good morning. Jim, I just wanted to talk about maybe the demand environment across both retail and restaurant. Are there any noticeable kind of differences or willingness to kind of invest in the current backdrop? I mean, you're winning a lot of clients, so clearly there's a demonstration of value there, but I'm just wondering, you know, you're doing this in what seems to be a difficult environment, and I'm just wondering if that could actually improve to the extent that there's some pushback from clients today. Thank you.

Good morning. Thanks, Dan. Excuse me. I would say we have not seen any pullback from customers, as I

mentioned

in my prepared comments. I've met with now over 50 of our larger customers, and most of them are very focused. I think we already have 13 or so that have committed to our next-gen solution, Boix, POS, and self-checkout. So I don't see necessarily a slowdown in terms of what they're looking to do to modernize their infrastructure. When you listen to the comments that Nick made around the investments and the benefits from Edge and our other applications that they're now having a chance to see in our labs. And so my impression is that the market is strong for us. Our customers have been on applications that date back, you know, 15 and 20 years or so. So I think they're all very interested in moving rapidly to enhance their business for all the reasons that we've outlined in the past. But maybe, Dan, you want to add anything to

it? Yeah, sure. Hi, Dan. On the retail side, as I had in my prepared remarks, we signed nearly 50 customers and we saw a good spread of demand across kind of the four key tenants of the retail proposition being hardware, software, services, and payments. So it's a good spread across the product portfolio. So, you know, we're encouraged by the consistent demand from customers, engagement with customers, and take up of proposition. So I'll hand over to Benny on the restaurant side.

Yeah, similar comments on the restaurant side as well. As you saw in the prepared remarks, some of the growth that we're seeing is very encouraging. And then to your point, given the market pressure, in fact, customers are looking on how do I improve customer experience? So that's important getting customers back into the restaurant. So any technology that helps around that, which is one of our key value propositions. And the other one is also driving costs down, their employees engagement as well, which is again our value proposition. So, in fact, as a result of some of the economic conditions, we are seeing an uptick of interest.

Yeah, Dan, I would make one last point to this. Where the company has historically supported its existing customer base, dating back to the acquisition, so the software applications they bought, what we're focusing the sales organization on is expanding into new logos, new relationships. And some of what Darren mentioned earlier represent new logos, not where Benny would see it more often in the SME space. We're starting to see it because of the applications that we have in the market. I mentioned in I guess it was the first earnings call that I was on, which was year end call that we're moving away from selling the legacy applications in favor of our next gen Boik's pause and Boik's self checkout. So we're seeing it not just with the existing base interested in upgrading, but we're definitely seeing new entrants to the base.

That's great. That's a great color. Just a quick follow up on free cash flow. Clearly better in the current quarter than what we saw in the first quarter. Still, there's a pretty material ramp that's required to get you to the 170 to 190 guidance. Also understanding your second half trends tend to be more strong for free cash flow. But I'm just wondering, are there any kind of key components that we should be mindful of and then kind of level of visibility that you have going into the second half on the free cash flow side? Thank you.

Thanks, Dan. So what I would say is Q2 was in line with our expectations on free cash flow. And to your point, we tend to generate our fee free cash flow in the second half. And EBITDA is expected, absolute EBITDA and EBITDA margins are expected to ramp as we go through the second half based on our cost work and ramping revenue from last year. So that and the normal seasonality is waiting for cash flow more to the second half. I would point out that CapEx, you know, we expect that to continue at the Q2 rate. So we'll probably be closer to about 170 of CapEx versus the original 150. But we have good visibility and we're comfortable with our guidance range.

OK, thank you very much.

Thank you. Our next question comes from the line of Ian Zaffino with Oppenheimer and Company. Please proceed with your question.

Hey, good morning. This is Isaac Salas in the line for Ian. Thanks very much for taking the question. I just had one on restaurants, EBITDA margin. Could you help us better understand what drove the strength in the quarter? It sounded like that's primarily on the growth of software and our mix as well as some cost initiatives, maybe just any kind of color you can give on that. And then, you know, expectations for segment margins as you progress through the year. Thank you.

So I'd say, you know, good software and services growth and recurring revenue growth in restaurants is helping margin payments growth, software platform growth. And, you know, restaurants has had a good consistent margin, you know, this year, last year, and we expect that to continue. We see restaurants finishing the year about 32 percent, which implies, you know, pretty consistent from what we saw in the first half. On the retail side, we expect improvement in margin in the second half from what we saw in the first half. That's where we've had hardware margin pressure that did improve quarter over quarter to one to two. And we expect to see that continued improvement as we get in the second half with revenue ramping and our cost actions that we're taking. And retail should be about 18 to 19 percent for the full year.

I would amplify on the payment side, clearly the restaurant organization, which has been involved with payments for the last four or five years, whenever JetPay was initially acquired. Now, with the WorldPay, excuse me, processing capability, we'll be able to sell point of sale on the retail side. So we would expect going into next year, increasing lift there as well on a margin basis for from payments.

OK, that's very helpful. Thank you. And then just as a quick follow up on the tariff exposure, I believe the eight to 12 million range is the same as last quarter. So maybe any additional details you can provide on any kind of mitigating actions that you're taking either through pricing or this item, maybe how conversations have gone with suppliers. Well,

we checked the news this morning, unlike last time when a tweet came out that we were unaware of. Look, it's a obviously a rapidly moving landscape. I think I counted something like 25 or so tweets that came out relative to tariffs. I read the articles this morning. There's more news out there. For now, we feel comfortable in the range that we just outlined. But I also mentioned in my prepared comments, you know, initially when this started, my initial, my expectation was this was somewhat transitory. It was not going to persist. But just watching the news, reading what's out there, my sense is this is not an end sometime soon. So I think we're going to have a different conversation in the back half of the year with our customers that either buy our services or buy hardware from us directly. Because, you know, at some point, this is going to be if this is permanent, then it's going to need to be more of a shared expense as opposed to our expense.

Thank you.

Thank you. Our next question comes from the line of Will Nance with Goldman Sachs. Please proceed with your question.

Hi, guys. Thank you for taking the question. You mentioned in response to a prior question, some of the cost savings initiatives in the back half of the year. I was wondering if you could just update us on the various initiatives that you have planned in place for this year and anything into next year and just kind of remind us, you know, where we are. Any of those processes. Thank you.

Sure. Well, so if I think about our cost program for this year, we sized it at 100 million. Two thirds is around vendor spend, one third around our own labor. And those that program is largely executed or being executed. About 40 percent of the savings hit in the first half and about 60 percent will hit in the second half. And then we're starting to plan for next year. And it's a little premature to talk about next year, but we'll talk about that in the next quarter or two.

I appreciate that. And then I was wondering if you could talk about the Buffalo Wild Wings renewal. Was that a competitive process? How did the RFP go? So and what do you think was kind of the tipping point to to get to renewal on that on that contract specifically? Thank you.

Yeah, I'm going to have Betty do that. But we will be somewhat limited on specifics. You know, we don't generally comment specifically on a customer per se, but I think we can give you some color on this.

Yeah, I think I would like three things that's also showing up in all of our business today. I think three things happened. One is the transformation of the team, the sales team and the leadership that we've brought in has improved our relationship. How we show up, how we engage. Yes, that was an RFP engagement. The second thing is our investment in our product. We've talked about some of the solutions and capabilities that we've brought on and we continue to bring. So this is not just about what we've brought on over the past 12 months, but it's also how we're investing in our strategy for the next 24 months. Key capabilities that they are looking to leverage. And then the third thing is, I would say this is a very deep relationship. Very similar to most of the relationship we have across the base. And that means it's not just one facet, it's multifaceted. So I wouldn't attribute it to just one thing, but all these multi-year relationships that we have continue to drive the momentum.

Yeah, I'm going to add some color to it as well. I'm not directly involved with this, although I have a relationship with the company. If you look at what NCR has gone through over the last several years between the split, the divestitures that we did last year, there's a lot of change that has gone on in the company. And as a, you know, before the split, this was a very large organization with a lot of moving parts and a lot of mouths to feed. Today we are singly focused on software. And I think that has resonated last year and in particular in the last six months with our customers. As I said, I've seen 50 customers myself, but every one of the executives have been on the road extensively. Beyond the account executives and the people in the field, they're starting to see executives, probably some of them for the first time in a long time. So there's somewhat of a re-wakening in our relationships with these longstanding relationships. These are extremely important to us. These are leading organizations across here in the U.S., but really across the world. And, you know, they're looking to continue the relationship. That's my expression, my impression from the meetings that I've had. They're looking to continue these relationships we've been there with for a very long period of time. Change is very hard at the point of sale. We have what we believe the leading applications in the market, especially what Nick has outlined with our next generation solutions. So I think it's very I think you should expect, as we've said in the past and it continued into this quarter, our attrition rate, revenue attrition rate is still at one percent. So customers are staying because they like working with, they believe in the company and we're committed to their success.

That's great. Appreciate all the color and obviously great to see. So congrats to the team. Thanks for taking the question. Thank you.

Thanks. Thank you. Our next question comes from the line of Cardiff Meta with North Coast Research. Please proceed with your question.

Good morning, Jim. Seems like you're starting to have success with the payment business. And I'm wondering, you know, how do you envision that business progressing over the next 12 to 18 months?

Good question, Cardiff. Thank you. Look, as you well know, I've been doing that for most of my career. We are learning the capabilities of the company, both from a point of sale now with WorldPay, but our own internal capabilities with FoyxPay, our FoyxConnect, our internal gateway capabilities. I think in the past, NCR's view was they were not in a payments space until they bought JetPay. And even then, JetPay was just too small of an application or a processor to be able to handle the size of these customers. So my impression is that customers, just like we see in restaurants, they're going to want, especially new customers, one relationship to provide all the services that we offer. And payments is obviously critical. The point of sale is the most critical, but it's only as good as the payments that continue. I've seen a number of examples where there's a variety of intermediaries between us and the actual processor. And what we're looking to do is streamline it. So thus far, we've had very good success with the mid-market on the retail side. We are beginning to engage with the larger customers. Again, this is domestically for both retail and restaurant. The customers, especially restaurants in the past, again, given the size of the JetPay's capabilities or its processing capabilities, I think larger restaurants were concerned to do business with that application. But that doesn't exist with WorldPay. So I think Benny has been very active, as has Miguel and the rest of his team, engaging in conversation. So I think we'll start to see again, we're not on that system until, I guess, the fourth quarter, end of the third quarter, beginning of the fourth quarter. So I would see it ramping into next year. It's not going to happen overnight. It's not as though we bought a portfolio and it just lights up like days of the past in payments. But these are long-term relationships. They trust us. And now we have capabilities that we've never had before. And so we're going to make those available beginning in the fourth quarter. On the payment side, we've already begun aggressively on the gateway side to be able to displace competitors that have somehow over the years found their way in.

To add a little bit of color, as Jim said, domestically strong and have the full -to-end proposition here in the U.S. We're in a good position on the gateway across multiple international markets. And we're actively standing up the pay capability in EMEA, which is our second biggest retail market. So that will follow through to next year.

One more point that Darren just mentioned that made me think of it. You know, with the global payments acquisition of WorldPay, my former company Global Payments, as well as Evo embedded in that organization, gives us greater reach, especially across Europe, into Asia, Asia Pacific, and into South America. So the combination of those two companies, leaders in their space, makes it even more attractive for us to be able to form a relationship with our customers to provide services in more markets than we would have been able to with just WorldPay previously.

That's good. Thanks, Jim. Just one question. Benny, on the restaurant side, there seems like competition is increasing on that side, at least over the last six months. And I'm wondering if you're witnessing that, the competition increasing, or if you think it's been about the same, just your perspective on how the market is right now.

Thanks, Karthik. Look, I think the restaurant space has been innovative, especially post the pandemic. We've seen a lot of startup smaller players entering the market. I wouldn't say the past six months has been any different since I have arrived. I think what gives me a lot of confidence is the few things that Jim and I discussed when we talked about Buffalo Wild Wings, which is, I think, our entrenched position our customer sentiment towards the transformation and then the showing up the new culture, the investment and the focus. So I wouldn't specially call out anything different over the past six months.

Yeah, one other point of this, I think in particular on the restaurant side, because I think we get compared against others who are public or not companies, is The These are enterprise organizations. The SME market on restaurant really is born out of the Aloha acquisition. So yes, we continue to support that market. It's an important market for us. But ultimately, where the company plays is at an enterprise, upper mid market and enterprise level. And I think on that score, we're seeing less of the competition, maybe than what you're thinking of.

Thank

you. I appreciate it.

Thank you.

Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from line of Parker Lane with CFO. Please proceed with your question.

Yep. Good morning, everyone. This is Jack McShane on for Parker. Thanks for taking the questions. I'm curious. Yeah. Good morning. So the team once provided CAGR expectations through 2027 that showed restaurant outpacing retail growth by a point or two. This is proved out from a revenue perspective, but the opposite seems to be true for ARR. Can you provide a little more color here? You know, would you expect this trend to shift? And maybe it's just the simple factor of quicker retail adoption of platform. But yeah, a little more color here would be helpful.

Yeah, I would I would suggest and I as Benny put in his comments during the spin and shortly thereafter the spin, there was a lot of dislocation at the executive level in particular on the on the restaurant side more so than the retail side. There's a number of dynamics here that cause that to occur. And so we only just recently re reestablished the entire leadership team underneath Benny in the last in his first quarter of this year or first half of this year. So I think trends that maybe were discussed several years ago or actually wasn't here. So I don't know exactly when that would have occurred. I think those trends will will change fairly rapidly over the next six to 12 months and probably be more in line with expectations previously. But again, the disruption of going through a split, of which I've seen that firsthand in another company. Now that's that is a big change for the organization. It was a change for the better, as I said earlier. But I think on the retail side, which represents the significantly larger piece of business because it's more global, that organization largely stayed intact. Now we've made a number of changes since I've joined almost in each of the regions, but we have a very strong core group of people across the markets. And the newest product to market are on our voice voice pause side on the platform side that has been promoted pretty significantly over the last 12 months, not the same on the on the restaurant side, not at least at

this point in time. You want anything? Got it.

Thank you. Yeah, on the payment side, up 3% this quarter. Is it in line with expectations internally? And you know, where do you think we can expect to see that go under the WorldPay partnership?

Yeah, I think as I said last, I don't know that I'm going to give a long term forecast on it, but I think it'll be significantly bigger than that number because you're talking about, you know, we have probably 450 very large customers that today don't take payments today. What you're seeing in payments is exclusively, almost exclusively SME and more on the smaller side than even the midsize. And that's almost exclusively on the restaurant side, more so than the restaurant, the retail side. Plus, we have, you know, we look at ourselves as four regions, Latin America, US, Canada, Europe, Asia, and then Japan. And other than the US, we're really not promoting payments in any other way. So I think you'll see significant growth growth timing. And we expect to begin to see and be able to show you in the first half of next year. But, you know, at this point, everything is very positive. The conversations we've had, the wins we've already had with customers both on Gateway and Payments, I think will continue. And the best evidence is on the restaurant side, all new customers that come in through our SME organization. You know, it's almost 100%. So it will look exactly like we outlined. I think in all the other ones, it'll take a little longer because they have existing relationships. These are bigger organizations. But in the end, we're offering them one relationship, as opposed to dealing with a multitude of relationships. And while that may sound somewhat trivial, when there's a problem, when you can't get your system to work because of a disconnect between the point of sale and the processor, then I can assure you lots of phones start to ring very aggressively. So having one relationship all the way to the end is absolutely a selling feature. It's not something unique to us. There's plenty. There's plenty other software companies that have been doing this for a number of years. It's just not something that NCR embraced years ago. And we're embracing it now. So I have high expectations that payments are going to be a meaningful part of our revenue going forward.

Great. Thanks for the call.

Yep,

thank you.

Thank you. Our next question comes from the line of Alex Newman with Stephen Zink. Please proceed with your question.

Thanks for taking the question. So lots of good new customer signings here within restaurant and retail. I was wondering if you could size the amount of ARR and backlog for implementation or the change in backlog. Just any color here is think about the forward software revenue growth here.

Yeah, I'll start this. If you look at a trend, I don't have the piece of paper in front of me. Just a second. If you look at our trend from last year to where we are now, actually this goes back to 23. I think ARR, software ARR was something around 700. It's approaching 800 today. So it is definitely moving in a very positive direction. And that's during a period of a spin of sales of businesses. I mean there's just a lot of clutter in that. I can't overemphasize how different an organization, even from the time that I was the chairman to where now I'm the CEO, that the focus has only enhanced because of all the good work that was done last year to fix the balance sheet and deal with some other structural issues. It's much more focused now on getting the new products out. That's what's planning for NRF. That's what Nick has been working on together with our CIO Johnson. So I would expect to continue to see that grow. And as we actually bring on these, launch the voice pause into the marketplace, I think you'll see somewhat explosive growth in those numbers.

And from Alex on the retail side, you've seen the mix shift in terms of what's been happening on the hardware trends. And per my prepared remarks of 50 customers, predominantly software and services, with the corresponding growth in platform and payment sites. So kind of the next shift is trending to recurring. So per your ARR comment, I think you'll see the tailwinds follow that rather than the typical one-time hardware. Benny?

Very similar on the restaurant side. Continued mixed shift towards software and services. And in those mixes, recurring versus one-time. I think the other shift that we're seeing is when we form these relationships, those relationships tend to be multifaceted. So it's not just software. It's software and services and it's not just POS, but it's also the POS and some of the add-on functionalities like loyalty, like the smart manager for the POS or your back office, etc. Those are driving the add-on lift that we're seeing. And we're excited about it.

Awesome.

Thank you.

Thank you. Thank you. Ladies and gentlemen, that concludes our time. Allowed for questions. I'll turn the floor back to Mr. Kelly for any final comments.

Thank you, operator, and thank you all for joining the call today and your continued interest in NCR VOIGS.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.