NCR Voyix Corporation (NYSE: VYX) (“NCR Voyix” or the “Company”), a leading global provider of digital commerce solutions, reported financial results today for the three and six months ended June 30, 2024.

“The strategic actions announced today support the continued realignment of our operating model to focus on our restaurant and retail customers and will enable us to improve our revenue and earnings growth over time,” said David Wilkinson, NCR Voyix CEO.

Q2 2024 Financial Results

• GAAP Revenue was $876 million compared to $946 million in the prior year.

• Normalized Revenue was $876 million compared to $928 million in the prior year.

• Net loss from continuing operations attributable to NCR Voyix was $(74) million, compared with $(51) million in the prior year.

• Adjusted EBITDA was $144 million compared to $168 million in the prior year.

• Normalized Adjusted EBITDA was $145 million compared to $183 million in the prior year.

• Diluted EPS from continuing operations was $(0.54), non-GAAP diluted EPS was $0.09.

• Software & Services Revenue was $656 million compared to $679 million in the prior year.

• Normalized Software & Services Revenue was $656 million compared to $665 million in the prior year.

• Total Segment ARR was $2.2 billion compared to $2.1 billion in the prior year.

• Software ARR was $1.3 billion compared to $1.2 billion in the prior year.

Strategic Announcements

Today’s announcements accelerate NCR Voyix’s long-term strategic objective to optimize the Company’s operations and drive shareholder value. The initial part of this multi-faceted plan was achieved in October 2023 with the completion of the spin-off of the Company’s ATM business into an independent publicly traded company, NCR Atleos. Following the spin-off, the NCR Voyix Board continued efforts to streamline the business and sharpen the Company’s focus to better serve its customers and drive value for shareholders.

The proceeds of the Digital Banking transaction will primarily be used to reduce leverage on NCR Voyix’s balance sheet. The Company expects its net leverage ratio to be approximately 2.0x net debt/Adjusted EBITDA on a pro forma basis after the completion of the aforementioned transactions and the pay-down of a portion of its debt. The Company is also executing a multi-phase cost alignment program that began with the elimination of approximately $75 million in annualized payroll costs, including operational and capitalized costs, as of the end of the second quarter. Further work is underway to identify an additional $30 million of annualized non-payroll spend expected to be eliminated from operational and capital costs once the Digital Banking transaction has closed and the outsourced design and manufacturing agreement has been implemented. This program contemplates an ongoing assessment of all costs.

Together, it is anticipated that these actions will significantly reduce leverage, moderate the variability of hardware-related revenue beginning in 2025, align NCR Voyix’s current operating costs to the new structure, and position the Company for accelerated revenue growth and margin expansion.

Sale of Digital Banking Business to Veritas Capital

• Veritas will acquire NCR Voyix’s industry-leading Digital Banking business, which provides banks and credit unions with a fully integrated and seamless customer experience for consumer and business banking across channels, leveraging the largest independent platform of its kind in the United States. With over 1,600 employees across seven global facilities, the digital banking business generated $579 million in revenue in 2023 from approximately 1,300 financial institutions.
• The purchase price consists of a cash payment of $2.45 billion and contingent consideration of up to $100 million in cash based on the achievement of the buyer’s return at the time of any future exit.
• The transaction is expected to close by year-end 2024, subject to customary closing conditions, including regulatory approvals.
• Goldman Sachs & Co. LLC served as financial advisor and King & Spalding LLP served as legal counsel to NCR Voyix.

New Commercial Agreement, Transitioning Point-of-Sale (“POS”) and Self-Checkout (“SCO”) Hardware to an Outsourced Design and Manufacturing (“ODM”) Model

• NCR Voyix will transition its POS and SCO hardware business to an ODM model with leading hardware provider Ennoconn.
• Once the agreement is implemented, NCR Voyix will continue to sell hardware to its customers as a sales agent; however, all other aspects of the hardware sale, including design, manufacturing, and warranty of the hardware, will be fulfilled by Ennoconn.
• NCR Voyix expects to recognize only the net sales commissions related to hardware sales after the agreement is implemented.

NCR Voyix management will discuss the transactions on its second quarter earnings conference call today at 8:00 a.m. Eastern Time, the details of which are described later in this release.

Financial Outlook

The Company is updating its full year 2024 guidance to reflect the strategic announcements described above, including the classification of our Digital Banking business as a discontinued operation beginning in the third quarter of fiscal 2024 as a result of the planned divestiture, which results in the removal of Digital Banking results from our outlook and results of operations for the full year and all prior periods, as follows:

In addition, the Company is providing the following supplemental full year 2024 outlook on a pro forma basis to give effect to the divestiture of the Digital Banking business and the application of the proceeds from the sale to pay down outstanding indebtedness, the ongoing expense reduction actions and the transition of the Company’s POS and SCO hardware businesses to an ODM model, as if all such transactions and actions had occurred on January 1, 2024, in order to enhance investors’ ability to evaluate and compare the Company’s operations on a go-forward basis, reflecting the impact of these transactions and actions.

In this release, we use certain non-GAAP measures. These non-GAAP measures include “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Non-GAAP diluted EPS,” “Adjusted Free Cash Flow-Unrestricted,” “Conversion Rate,” “Net Leverage Ratio,” “Normalized Revenue,” “Normalized Adjusted EBITDA,” and “Normalized Adjusted EBITDA Margin,” and others with the words “non-GAAP” or “normalized” in their titles. These non-GAAP measures are listed, described and reconciled for historic periods to their most directly comparable GAAP measures under the heading “Non-GAAP Financial Measures” later in this release. Our Adjusted EBITDA for historic periods after giving effect to the spin-off of NCR Atleos includes certain costs historically allocated to NCR Atleos that do not meet the definition of expenses related to discontinued operations for purposes of GAAP requirements regarding the reporting of discontinued operations. Accordingly, our guidance for Adjusted EBITDA in 2024 is more comparable to our historical Normalized Adjusted EBITDA, which includes an adjustment for these estimated costs. With respect to our Adjusted EBITDA outlook for full year 2024 on an actual and pro forma basis and our pro forma outlook for our anticipated Net Leverage Ratio, our Adjusted EBITDA Margin, our Adjusted Free Cash Flow-Unrestricted and our Conversion Rate, we do not provide a reconciliation of the GAAP measure because we are not able to predict with reasonable certainty the reconciling items that may affect the GAAP net income from continuing operations and GAAP cash flow provided by (used in) operating activities without unreasonable effort. The reconciling items are primarily the future impact of special tax items, capital structure transactions, restructuring, pension mark-to-market transactions, acquisitions or divestitures, or other events. These reconciling items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate, the GAAP measures. The Company also believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors.