Q4 2024 NCR Voyix Corp Earnings Call
Speaker Change: A film by David Wilkinson A film by Brian Webb A film by Brian Webb A film by Brian Webb
Speaker Change: [music].
Speaker Change: Greetings and welcome to the NCR Blacks Q4, 'twenty 'twenty four earnings call. At this time, all participants are in a listen only mode.
Speaker Change: A question and answer session will follow the formal presentation should anyone require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it.
Speaker Change: It is now my pleasure to introduce your host Sarah James Schneider, Vice President Investor Relations. Thank you you may begin.
Speaker Change: Good morning, and thank you for joining our fourth quarter of 2024 earnings Conference call. This morning, we issued our earnings release reporting financials for the quarter ended December 31st 2020 for 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.
Speaker Change: Got it and see our satcom and have been filed with the SEC.
Speaker Change: With me on the call today are Jim Kelley, our Chief Executive Officer.
Speaker Change: Brian Walsh, our Chief Financial Officer.
Then each at al Presidente restaurants and.
Darren Wilson: Darren Wilson President retail.
Darren Wilson: This call is being recorded and the webcast is available on the Investor Relations section of our website.
Darren Wilson: Before we begin please be advised that our remarks today will contain forward looking statements.
Darren Wilson: 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.
Darren Wilson: For additional information on these factors please refer to our earnings release and our other reports filed with the SEC.
Darren Wilson: We caution you not to place undue reliance on these statements.
Looking statements during this call speak only as of the date of this call and we undertake no obligation to update them.
Darren Wilson: In addition, we will be discussing or providing certain non-GAAP financial measures today, which.
Darren Wilson: Which we believe will provide additional clarity regarding our ongoing performance.
Darren Wilson: 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.
Darren Wilson: See our press release furnished as an exhibit to our form 8-K filed this morning, and our supplemental materials available in the Investor Relations section of our website.
Jeff: With that I would now like to turn the call over to Jeff.
Jeff: Thanks, Tara Jane and good morning, I would like to welcome all of you to our fourth quarter earnings call.
Jeff: I am Jim Kelly NCR voices newly appointed Chief Executive Officer as you May know I was appointed independent chair of the board of Directors in October of 23, followed by executive Chair in May of last year.
Jeff: This 15 month period allowed me to gain keen insights into our operations products customers and strategy before stepping into my new role.
Jeff: Head of discussing our fourth quarter results I wanted to share my initial observations of the company.
Jeff: I accepted my current position as I believe we have a strong foundation upon which to execute our growth objectives and would like to elaborate on what I view as our key strengths.
Jeff: Beginning with our competitive positioning.
Jeff: Company has an extensive track record supporting some of the largest global retail and restaurant brands and is today. The number one in self checkout and point of sale software for convenience and fuel grocery and restaurants.
Jeff: The sales cycle for enterprise point of sale is very competitive once committed we generally maintained these relationships for over 10 years, sometimes as long as 30 years. This is clearly illustrated by our strong revenue retention of 98% over the last three years.
Jeff: The second is our platform.
Jeff: Over the past five years the company has invested significantly in our platform to meet the growing demands of restaurants and retailers around the globe.
Jeff: We have several paths to connect customers to the platform.
Jeff: This enables existing customers to access real time insights and additional functionality avoiding a wholesale point of sale conversion.
Jeff: Success of this approach is reflected in our high teens revenue growth in the enterprise platform customers and represents 15%.
Jeff: Of total company software and services revenue.
Jeff: Further we have approximately 74000 sites on our platform an increase of 26% from the prior year and over 110 billion API calls at the end of 2024.
Jeff: In restaurants, Aloha cloud point of sale has been widely available for fast casual for more than a year with nearly 15000 locations operating on our platform today, many of which are multi site businesses.
Jeff: For 2025, we have plans to launch several enterprise platform solutions two of which are in labs with customers. We are actively working with our existing base and prospects to deliver a phase release of enhanced capabilities beginning this year.
Jeff: In retail our newest self checkout solutions launched in 2024 are available in the U S and parts of Europe and Asia Pacific.
Jeff: We expect full rollout globally by year end.
Jeff: Our point of sale and fuel are in pilot in both.
Speaker Change: The U S and Asia Pacific with deployments scheduled for later this year followed by a release in 2026.
Speaker Change: As our suite of platform solutions are released to the market, we anticipate strong demand from our existing base along with new customers.
Speaker Change: Accelerating platform sites and transaction growth.
Yeah.
Speaker Change: The third difference is service, we are uniquely positioned to meet the needs of retailers and restaurants with our extensive global service offering.
Speaker Change: We leverage a team of 8000 highly trained professionals to provide software management store implementation and hardware maintenance for our customers.
Speaker Change: Our unmatched remote and field service teams and sure 24, seven support, particularly during the holiday seasons.
Speaker Change: Historically these services were built on a fee for service basis or an annual contract. We are now bundling services and software into a multiyear subscription.
Speaker Change: And where services are stand alone, we're offering a subscription contract. This.
Speaker Change: This approach is mutually beneficial as customers gain greater cost transparency, while we improve resort resource allocation and drive efficiency.
Speaker Change: And lastly, our payments opportunity.
Speaker Change: Well the company has successfully executed its payment strategy with small and mid sized restaurants, we've been unable to meet the complex and diverse payment requirements of enterprise retailers with the existing third party authorization platform.
Speaker Change: As such we have entered into a five year non exclusive agreement with world pay a global leader in payment solutions to provide the necessary functionality to meet the needs of our enterprise customers beginning in the United States.
Speaker Change: For 2020 for our U S customers processed over 500 billion in payments through their point of sale the majority of which relates to enterprise customers. Once implemented later this year, we will begin offering these payment capabilities to new and existing customers.
Speaker Change: In parallel to launching in the U S. We will work with world pay to roll out these capabilities to our other markets.
Speaker Change: Finally over the next two quarters I will be travelling to meet customers strengthening our relationships and ensuring we are executing on product deployment and service expectations.
Speaker Change: Focus on urgency and accountability together with the actions taken last year to right size, the balance sheet and streamline operations will position us better to leverage our core strengths and achieve our growth plans with that I will turn the call over to Danny to provide an update on restaurant.
Speaker Change: Right.
Danny: Thanks, Jim in the fourth quarter, our restaurant business signed more than 200, new software and services customers, including an enterprise restaurant as we also converted more than 135 existing customers to our platform.
Danny: Our platform and payment sites increased by 6% and 8% respectively.
Danny: Software Ara increased 3% and total <unk> increased 4% in the quarter.
Danny: In our enterprise Division, we want a multiyear platform and payments contract with yoga Atlanta through a competitive process. The service they have 200 stores across the U S.
Danny: We will provide a local cloud point of sale. In addition to data and analytics capabilities integrated online ordering and third party delivery management.
Danny: Our proprietary software and payment solution will enable yogurt line, so centralized store data and online ordering while reducing in store hardware and cost of ownership.
Danny: As you highlighted earlier, we're focused on converting existing software customers to our platform.
Danny: For example in Q4, we converted at Brinker International a leading casual dining restaurant company and operator of Chili's and Maggiano, so enable them to minimize cost and disruption as they continue to grow their brands.
Danny: Internationally, we signed an 80 million dollar end to end services contract with one of the largest global fast food chain for their business in the UK and Ireland.
Danny: We displaced the incumbent provider through a competitive process due to our comprehensive managed services offering.
Danny: Beginning this year, we'll provide this customer with the increased support inefficiency improve services the outcomes for franchisees restaurant crew members and corporate employees.
Danny: To expand our services agreement with this customer across their global footprint over time.
Danny: Finally, our payments attach rate remains strong with essentially all new customers attaching payments to their contract this quarter.
Danny: As we implement our processing agreement was won't pay later this year, we'll focus on aggressively cross selling payments into our enterprise base to drive additional growth.
Danny: I will now turn the call over to Darren to discuss our retail performance.
Darren Wilson: Thanks Benny.
Speaker Change: Morning, everyone like Jim I briefly wanted to introduce myself as the president of our retail segment.
Speaker Change: Following a career and payments are joined NCR for weeks, initially and a strategic role before being appointed President International in November of 'twenty 'twenty four.
Speaker Change: These roles, providing me excellent insight into the company its customers and operations.
Speaker Change: Now turning to our performance in the fourth quarter, our retail business signed more than 35 customers leading to nearly 700 additional sites.
Speaker Change: Our platform sites increased by 46% software.
<unk> increased by 5% and total <unk> increased 6% in the quarter.
Speaker Change: That's an example of a platform execution, we renewed and expanded our agreements with two large grocery chains in Europe, and the U K to upgrade their existing point of sale to our platform later this year.
Speaker Change: So that will provide self checkout and value added platform solutions. In addition to helped us surfaces to enhance support for these customers.
Speaker Change: Similarly, we signed a new five year contract with a national grocery chain in Japan to provide a point yourself solution connected to the platform across their store footprint.
Speaker Change: Finally, as we announced earlier this month, we renewed and expanded our long standing government relationship where the defense Commissary agency for a total contract value of $335 million.
Speaker Change: Under the agreement, we will provide software support including catalog.
Speaker Change: Wondering receiving pricing and point of sale. In addition to hardware maintenance for nearly 250 military sites around the world.
Speaker Change: As Jim outlined we will continue to focus on winning additional customers and expanding our existing agreements at the time of renewal as we move through 2025.
Bryan: And with that I'll turn the call over to Bryan Bryan.
Speaker Change: Brian.
Brian: Thank you Darren and good morning, everyone before discussing our fourth quarter performance I would like to provide a brief update on the hardware ODM implementation our team and an icon are working very closely through the details of the transition and economies to fully replicate our infrastructure and technology before the ODM agreement can become operational too.
Brian: Ensure there is no disruption to our customers as such we expect to continue to recognize hardware revenue for most of the 2025, which will be reflected in our full year guidance.
Brian: Accident hardware will improve our recurring revenue composition from approximately 60% to 75% once the ODM as operational as part of the company's continued shifts where our recurring software and services model. In addition to hardware we are exiting certain onetime software licenses and services, which totaled $60 million for 2024.
Brian: This will further improve our revenue composition to 80% recurring.
Brian: Contribution related to the certain one time items has been offset by cost reductions. We are implementing in Q1, we are committed to becoming a primarily recurring software and services company as quickly as possible, while continuing to deliver an end to end offering to our restaurant and retail customers.
Brian: Lastly, as it relates towards normalized financial measures, we expect the two remaining alias countries to be exited during the first half of this year. These countries are included in our reported results for the fourth quarter and full year 'twenty 'twenty. Four however, we will continue to exclude the revenue and adjusted EBITDA impacts on our 25 guidance once exited the financials from these countries.
Brian: Will be reflected in discontinued operations for all historical periods.
Brian: For the quarter reported revenue was $682 million and normalized revenue was $678 million, reflecting a decline of 14% due to the expected weakness in hardware sales.
Brian: Software and services revenue declined 2% to $521 million due to the 11 million prior period impact of them.
Brian: The terminated commercial agreements with NCR alios, excluding the impact of these agreements software and services revenue increased 1% driven by growth from our hardware maintenance platform and payments revenue streams software revenue decreased 3% to $251 million.
Brian: Due primarily to a decline in onetime perpetual software license revenue, which was partially offset by revenue from our platform and payments revenue streams.
Brian: Services revenue of $270 million was flat year over year due to the previously mentioned commercial agreements excluding the impact of these agreements services revenue increased 4%, which reflects the increase in hardware maintenance revenue.
Brian: Adjusted EBITDA increased 75% to $114 million in the fourth quarter as margin expanded 850 basis points to 16, 7% normalizing for the impact of the digital banking stranded costs in the prior year adjusted EBITDA increased 58% to $112 million. This significant.
Brian: Improvement was largely driven by approximately $120 million in your cost actions executed in 2024 as a result of the company exiting noncore businesses.
Brian: As of the end of the fourth quarter, we had approximately 74000 sites on our platform an increase of 26% from the prior year software.
Brian: In total segment, <unk> increased 4% and 5% respectively.
Brian: Turning to our segment results for the quarter.
Brian: Beginning with restaurants software revenue increased 3% to 91 million and services revenue increased 3% to $72 million driven by payments and hardware maintenance growth.
Brian: Total segment revenue declined 5% to $211 million due to the expected decline in hardware.
Adjusted EBITDA increased 36% to $68 million as margin expanded 980 basis points to 32, 2%. This improvement was driven by software and services revenue growth coupled with our efficiency initiatives.
Brian: Turning to retail software revenue declined 3% to $155 million, while services revenue increased 4% to $193 million the growth in services revenue reflects hardware maintenance growth while the decline in software reflects the decrease in one time software license revenue total segment revenue declined 15% to 461 million.
Brian: Due to the expected decline in hardware sales adjusted EBITDA increased 13% to $102 million as margin expanded 560 basis points to 22, 1%. This improvement was driven by a combination of services revenue growth and our efficiency initiatives.
Brian: Lastly, corporate and other expenses decreased 25% to $56 million when normalizing for the spin and digital banking impacts in the prior year corporate and other expenses decreased 16%. These results reflect the cost initiatives, we implemented in 2024 and lapping spin related dis synergies this quarter.
Brian: Adjusted free cash flow unrestricted with 72 million for the quarter before considering $27 million of cash expenditures related to restructuring and other strategic initiatives. This represents a conversion rate of nearly 64% when excluding restructuring.
Brian: We initially anticipated tax payments of $375 million pertaining to the proceeds from the digital banking sell last year, we have updated our estimates based on tax planning and have lowered the amount to $320 million of which $20 million was paid in Q4. We ended the quarter with 1.6 turns of net leverage based on 419 million.
Brian: Our pro forma 2020 for adjusted EBITDA.
Brian: During the quarter, we repurchased 4 million shares for approximately $56 million under our 100 million share repurchase program in February we completed the remaining repurchases purchasing seven 3 million shares in total.
Brian: As we move into 2025, we expect to maintain our pro forma net leverage ratio at or below two turns as we consider the allocation of future cash flow, we will prioritize investments in our platform and related products. In addition to considering both common and preferred share repurchases with excess cash.
Brian: Turning to our outlook, we are providing revenue guidance inclusive of hardware revenue as discussed we expect the Anaconda ODM to become effective at some point in the second half of the year at which time, we will update our guidance to reflect only the related commissions on a go forward basis as such we expect currency neutral revenue to range from $2.
Brian: $5 75 billion to $2, six 5 billion, which reflects a 9% to 6% decline driven mostly by hardware as shown on slide 11 of the presentation, our core software and services revenue adjusted for terminated commercial agreements with Atlas and see seen one time software and services agreements is expected to grow in the low single digit.
Brian: In 2025.
Brian: <unk> and platform sites are both expected to increase mid to high single digits in 2025.
Brian: Currency neutral adjusted EBITDA is expected to range from $420 million to $445 million, representing an increase of 21% to 28% adjusted.
Brian: Adjusted EBITDA margin is expected to range from 16, three to 16, 8%.
Brian: Our outlook does not include any potential impact of the pending tariffs given the current uncertainty regarding the timing and ultimate structure and the extent to which the company can mitigate the impact.
Brian: non-GAAP diluted earnings per share is expected to be between 75 and 80 cents. This is based on a fully diluted weighted average share count of approximately 162 million shares and an expected tax rate of 26%.
Brian: Adjusted free cash flow unrestricted for the year is expected to be between $170 million and 190 million when excluding 55 million of restructuring $300 million of taxes related to the digital banking Sal and $20 million of accelerated product investments being funded by the digital banking proceeds. This reflects an adjusted conversion rate of 40 to 43.
Brian: Percent.
Brian: Our adjusted free cash flow unrestricted guidance does not include the expected positive impact of working capital from the ODM transition, which we now anticipate will primarily benefit us in 2026 at year end total inventory was $208 million comprised of finished goods and raw materials of $89 million and service parts of $119 million.
Brian: Once the ODM transition is complete as inventory transitions to <unk>, we anticipate a cash flow benefit.
Brian: <unk>, 50% of the $89 million when taking into account accounts payable.
Brian: The remaining service parts inventory will remain with the company to support our services business.
Brian: Finally, I'd like to provide some color on the first quarter Q1 revenue is expected to decline in the mid teens due to our significant hardware refresh from one of our largest retail customers in the prior year period, we expect Q1 adjusted EBITDA to demonstrate high teens growth versus Q1, 2024 reported results, which reflects cost actions taken in 2000.
Brian: 24, our adjusted EBITDA is.
Brian: It is expected to improve sequentially as we go through the year, reflecting our normal seasonality. In addition to the timing of revenue and our 2025 cost initiatives with that I will turn the call over to the operator to begin the question and answer session operator.
Thank you we will now be conducting the question and answer session. If you would 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 would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset.
Brian: Before pressing the star keys.
Brian: One moment, please while we poll for questions.
Speaker Change: The first question is from Kartik Mehta from Northcoast Research. Please go ahead.
Kartik Mehta: Hey, good morning, maybe just on the payments agreement that you announced it seems like that could be a significant opportunity for you going forward maybe.
Kartik Mehta: Maybe if you could just elaborate on timing of when do you think you could start seeing a benefit of that.
Kartik Mehta: We know how long that could take in terms of achieving kind of full benefit.
Kartik Mehta: Good morning, Kartik, Yeah, sorry, as you saw in or read or heard in the.
Kartik Mehta: The comments that I made $500 billion is a big number it actually translates into <unk>.
Kartik Mehta: 12 billion transactions.
Unfortunately.
Kartik Mehta: While I think it was a good move from by Mike the prior CEO or two prior Ceos ago, and bringing payments to the company because software as you know has been aligning with payments.
Kartik Mehta: Significantly over the last several years, probably over the last 10 years.
Kartik Mehta: Unfortunately, the jet paid platform just did not have the capabilities.
Kartik Mehta: It can support restaurant, but it could not support the retail organization just given the complexities of different.
Kartik Mehta: [noise] fuel issuers and other complexities of the restaurant space. So my expectation is that this will be live by the end of the summer at the latest.
Kartik Mehta: [noise], we'll be migrating some of the accounts that aren't currently with currently with the prior provider onto Jeff Hey, excuse me onto world pay.
Kartik Mehta: And then in addition.
Kartik Mehta: Soon as the.
Kartik Mehta: System is operational which could be as early as the spring.
Kartik Mehta: Before the conversion will start migrating we'll start selling new retail customers domestically and then also as I said, we're going to start rolling it out to Latin America, and Europe, probably the next two markets to take advantage of their footprint in both regions and just to give you an order of magnitude. If you go back to my previous.
Speaker Change: This company Evo.
Speaker Change: We had close to $700 million of revenue and we did about 150 billion in volume. So this is multiples in terms of size.
Speaker Change: And again as I said this is a completely new revenue source for the company. It's one that I think they would have liked to have achieved previous we've worked on this for a number of months and Fortunately.
Speaker Change: <unk> World pay has been a great partner to work with to get to an agreement that will enable us to sell this along with our.
Speaker Change: Sales of product and services into our base as well as new customers.
Speaker Change: Thanks, Tim and just as a follow up.
Speaker Change: You, obviously new role for you congrats on that but I was wondering if you.
Speaker Change: <unk> looked at the business kind of one or two opportunities. You think you can take advantage of job in 2025.
Speaker Change: Got it.
Speaker Change: Thanks for the question, Yeah, there's a huge opportunity across all our market.
Speaker Change: The kind of pivot to a next generation solutions and I'm kind of a recurring revenue model, especially in the services space as well as a real untapped potential so.
Speaker Change: We've got a number of customers in the pipe in terms of our future state product.
Speaker Change: Which oh going through implementation now, which is why we didn't name any of them in in the quarter, but the.
Speaker Change: You'll hear over the next.
Speaker Change: A couple of quarters announcements of some pretty significant next generation opportunities that include both.
Speaker Change: Our next product line, but also our services opportunity so and then bolt on.
Speaker Change: Later in the payments functionality to them there's.
Speaker Change: Plenty of a ton of opportunities there.
Speaker Change: Perfect. Thank you both appreciate it.
Kartik Mehta: Thanks Kartik.
Speaker Change: The next question is from will Nance from Goldman Sachs. Please go ahead.
Will Nance: Hey, I appreciate you taking the question.
Will Nance: The first question on the software and services outlook I hear you on the exiting of the licensing arrangements and.
Will Nance: The top comparison that generates for the year could you talk about.
What is the remaining exposure to software licensing and how do you. How do you think about sort of the cadence of exiting these structures over time, how long how long would this be a drag on total revenue.
Will Nance: Well.
Will Nance: Thanks again for the question.
Will Nance: [noise], what we're laying out is a direction that we're heading so as we said in the script, we kind of pro forma what the impact would be would there be some one time licensing that will occur this year likely that will be the case, but the direction I've given to the sales organization through both any and Dara.
Will Nance: Lynn.
Will Nance: Is that for the company as we look forward, we're going to sign up customers on a subscription basis for the reasons that we stated in the script because in the end, it's better for them and obviously, it's better for us.
Will Nance: So that we have better line of sight.
Will Nance: You know NCR has been around for a long time.
Will Nance: And it seems like the model that was in place years ago, and just perpetuated itself and it was what was sold previously, but we're going to take a more direct and aggressive stance going forward with new customers and even the existing customers. The company had already started this path David had this underway last year.
Will Nance: And we're just going to make a bigger push going forward and that's why Brian in his prepared comments.
Will Nance: <unk> the impact so it's not a large number but it obviously has some impact I think Brian wants to add to this.
I'd just add that.
Will Nance: At the end of the year, if we execute like we think we're going to there's probably $30 million to $40 million of software at one time software license revenue still left.
Will Nance: But it'll be mostly gone.
Will Nance: Got it that's helpful. So presumably if you continue to exit these things the drag in 2026 is lower than the 60 million that you outlined today, yes, okay. Great. Yeah. If you look at it would occur if you look at what's occurred with last year a lot of this was the restructuring efforts. After the spin are selling digital banking.
Will Nance: We would have liked to had ODM done by the end of the year, but some technology challenges gotten away and ultimately want to make sure that our customers are see.
Will Nance: See no impact to this change, but theres other aspects of the business now on the sales side as well as <unk>.
Will Nance: We repositioned and how we're going to be a software product company going forward and those steps are being implemented this year.
Speaker Change: Got it okay that makes sense, Okay and then the second question was just on the hardware outlook. So understanding there is some gross versus net that we need to think about on the on the revenue outlook for hardware is there any way you could share on a like for like basis, how the outlook compares to the $100 million of revenue you gave pro forma for the Odeon deal.
Will Nance: Ill.
Will Nance: Previously and just.
Speaker Change: As a follow up on the first quarter outlook I think last year, you called out a pretty significant headwinds from.
Speaker Change: From people delaying hardware refreshes is that still happening is that why you're you're calling out another tough comp in the first quarter. This year.
Speaker Change: Yeah. So first on the question around the pro forma revenue if we take the gross hardware and move it to <unk> and the metrics file that we published you can see how we finished the year with that metric and we had said the pro forma business would be $21 50 in revenue and we ended up at $21 71.
Speaker Change: We said that the pro forma EBIT, where we are targeting $4 30, we ended up at 419. So the margin was about 19, 3%. So we essentially performed.
Speaker Change: In line with what we said as you think about hardware for this year, we're giving our guidance based on gross hardware just because we anticipate spending most of the year.
Speaker Change: Selling hardware directly and you can see if you look at the midpoint of our guidance were down about 22%.
Speaker Change: But I would say that the pro forma revenue has held up in line with what we expected last year when I think about hardware in general, Yes last year and this year, we're having pressure because people are doing less refreshes of our customers are doing much refreshes.
Speaker Change: But specifically if I think about the cadence of this year, we had one large customer that did do a lot of activity in Q1 last year that now their activity is spread this year more between Q2 and Q4 and so that's given us a timing issue on hardware. So the rate of revenue decline moderates as we go through the year because of that and as we ramp.
Darren Wilson: Deals that we sold in the second half of last year around software and services a lot of our big deals that Darren mentioned they ramp in the second half.
Speaker Change: That's very helpful. I appreciate all the details and thanks for taking the question.
Darren Wilson: Thank you.
Charles: The next question is from Charles <unk> from Stephens, Inc. Please go ahead.
Speaker Change: Good morning, and thank you for taking my question.
Speaker Change: My first question is on the government contract I think you had said it's a five year deal for 300, the total contract value of $335 million could you give us a little detail in terms of how much of that is incremental I don't know if you already had a relationship with them and secondly, how we should think about the timing of timing of that the.
Speaker Change: The revenue recognition there.
Speaker Change: So that net debt is a long standing relationship we have but it did expand pretty meaningfully and so we're getting incremental revenue from that contract. This year and it starts to ramp towards the end of the first quarter and so that will start to see revenue pick up.
Speaker Change: Got it.
Speaker Change: And just a quick follow up on the guide.
Speaker Change: In terms of the revenue growth how should we think about that from a recurring versus non recurring standpoint, and then secondly, if you could just touch on.
Speaker Change: Any remaining efficiency initiatives you have in place.
Speaker Change: And the potential impact on margins in the coming year as well.
Speaker Change: Yes, so recurring revenues grow expected to grow nicely in both retail and restaurants this year of 4% to 5% and so all of the pressure is coming from the nonrecurring hardware that we've talked about and then onetime revenue around services, partially because we're exiting it on purpose and then just with the hardware being down the pressure from the install revenue.
Speaker Change: So that's.
Speaker Change: How do we see that kind of playing out and then when we think about costs. There is about $100 million of cost actions, we're taking this year.
Speaker Change: 70% of that is around our vendors we've been working to vendor program for the last four or five months that involves in sourcing key functions and just finding efficiencies with our vendors and then the other 30% is related to our head count and that's mostly being action in the first quarter and so those cost actions will ramp as we go through the year and that's the timing of.
Speaker Change: The revenue kind of moderating and the cost actions ramping.
Speaker Change: Why EBIT will sequentially improve as we go through the year and as Jim just to add some color to that so that is those actions now have a lot to do with exiting the onetime services that the company I think.
Speaker Change: Became accustomed to over the years as opposed to teams of people supporting our existing customer base I think that's as I said in my comments, that's clearly one of the Differentiators for our company 8000 people thousands of which are in the field supporting our customers and it's it's not feasible to support these large.
Speaker Change: Those without a team of people on the ground in their locations.
Speaker Change: Levering service whether it's.
Speaker Change: Delivering equipment or delivering.
Speaker Change: Solutions on software and implementations.
Speaker Change: And to the extent in the past some of the services provided were more onetime in nature as we're shifting away from the onetime business to a recurring business, that's where you're seeing these reductions come in they didn't take place last year.
Speaker Change: Because we had existing <unk> that were in place so it wasn't feasible, but as we start this year and reposition the company.
Speaker Change: For a more recurring model than theirs.
Speaker Change: Obviously, some consequences associated with that.
Speaker Change: Got it I appreciate all the color. Thank you.
Speaker Change: Okay.
Speaker Change: The next question is from Ian Zaffino from Oppenheimer and company. Please go ahead.
Speaker Change: Hum.
Speaker Change: You guys just talk about the growing town bottleneck right now and expectations for growth for <unk>.
Speaker Change: That's a pretty broad question.
Dave: Thanks, Dave.
Speaker Change: Tad hopefully recovering the globe in terms of retail coverage.
Speaker Change: To zero in on one woman tertiary market.
Speaker Change: Uh huh.
Speaker Change: Interesting and we can explore with us offline.
Speaker Change: Set the despite the hardware situation that.
Speaker Change: Bryan outlined we're actually seeing very active conversations in on all of our markets. Both in terms of expansion.
Speaker Change: In terms of services solutions or software solutions from existing customers.
Speaker Change: But a lot of active new logo opportunities out there with.
Speaker Change: With customers looking to upgrade their state grade their efficiencies in their states, but also adding new lines new sites et cetera. So it's it's having been at the last two retail trade shows both in New York and in Germany.
Speaker Change: The the flow through I understand probably record level in terms of interest in.
Speaker Change: Nextgen type solutions and very much into the services efficiency shrink continues to be a significant issue in grocery or any so self checkout environment.
Speaker Change: There are a lot of interest in helping retailers kind of improve the efficiencies on the losses.
Speaker Change: And we have the product range and solution lines to cover that.
Speaker Change: It's it's buoyant I'd say, yeah, I would add to that if you look at it you could go back to the comments I made on the growth in the platform itself, 26% growth in AR.
Speaker Change: Transactions coming from the platform that is representative of our existing estate of customers that are more and more accessing that.
Speaker Change: Additionally, new customers interested both in the platform and our next generation solutions.
Speaker Change: And it's not just on the software side as I was walking in here. This morning, I would to start to the new head of North America and he was talking about.
Speaker Change: Very very large RFP or RFP that we just entered in the U S for.
Speaker Change: For a customer we have not had previously.
Speaker Change: And that's around the services side and again I think maybe that's a little bit under.
Speaker Change: Appreciated for the company is that services business here is a significant part of our differentiator in the marketplace.
Darren Wilson: The combination of the two I think sets us apart. So my expectation is technology is always driving for greater efficiency from our customers and the company has invested very heavily over the years to make sure that we have those products I think we've been maybe a little late in getting some of them to market, but as Ben said and Darren Theres a lot.
Darren Wilson: And also in my comments, there's a lot of that's coming to market. This year that we can begin discussing with customers. So we're you know.
Darren Wilson: Modestly optimistic about the prospect of over achieving just given what we've seen in the early days of this year.
Speaker Change: Okay. Thank you very much.
Speaker Change: The next question is from Dan Perlin from RBC capital markets. Please go ahead.
Speaker Change: Thanks, Good morning.
Speaker Change: Jim I appreciate all the comments you opened up with in your prepared remarks My question is.
Speaker Change: Now that you're back in the CEO seat.
Speaker Change: And given kind of the change of management here, what are you hoping to accelerate or is there a strategic priorities that had to change as a result, like the immediacy with which the switched occurred suggests that you guys got to accelerate some things. So I'd just love to hear your thoughts there.
Speaker Change: Well. Thank you Dan It has been a long time I think the last time, you and I talked I think where we're sitting in Vegas at some <unk> or something.
Speaker Change: Okay, that's right.
Speaker Change: Actually it is.
Speaker Change: It's actually a sad story, because when I left there.
My General Counsel is looking at me like what are you going to say.
Speaker Change: When I left there I had.
Speaker Change: Ah kidney stone, which I had no idea what a kidney stone was and I would highly recommend everybody to drink a lot of water because of kidney stones are incredibly painful.
Speaker Change: Anyway.
Darren Wilson: I will take that under advisement for Sherry go.
Darren Wilson: You didn't ask that question, but it brought back a very bad memory, even though our conversation was very pleasant.
Darren Wilson: The kidney stone was not.
Darren Wilson: Anyway.
Darren Wilson: So I think so.
Darren Wilson: Certainly not just because I'm here and.
Darren Wilson: And Darrin on the payments side, we've added a number of payments people the alignment of payments and software as I said earlier has been ongoing for many years. It was a big thrust for us at Evo.
Darren Wilson: I think it's something like I said, Mike made an early investment to bring payments in and it's been impactful to our restaurant business. It's just unfortunate.
Darren Wilson: The product set at <unk>, which is not broad enough in the effort to try to get it to there was just you know probably.
Darren Wilson: Probably more than they wanted to invest so.
Darren Wilson: So I think with world pay that is a big opportunity Charles Adam the team there have been great to work with and we're looking forward to a very very.
Darren Wilson: Strong partnership going forward and I think on the retail side I think that will take some of the pressure off the topline as we implement.
Darren Wilson: Across the U S and then as we said in these other markets.
Darren Wilson: I think the other piece is.
Darren Wilson: Historically the company. It was a very large $8 billion company as you know with lots of different components to it now the big ATM business that is separated I think there was a very big focus on servicing the base probably less than.
Darren Wilson: Focusing on the new customers and there is somewhat of a finite number of large enterprise organizations, but we clearly do not have all of them or nearly close to that.
Darren Wilson: So the message at the sales kickoff, which took place in January was about growth and focus on as much servicing our very important base, but also finding more and more customers.
So I think the combination of those two factors and then we have some customers today that we're probably behind in our delivery dates. So that's also a big aspect of it which will also drive additional growth because you can kind of think of this as backlog.
Darren Wilson: As we complete our first rollout than the rest of them. Following additional revenue. So I think we have a number of areas that will be impactful this year and clearly into 'twenty six unfortunately payments arent going to start immediately as I said, it's probably more like the summer end of the summer, where it's fully implemented and converted.
Darren Wilson: But we will start selling that is as quickly as possible.
Darren Wilson: That's great.
Darren Wilson: One last piece I think that.
Darren Wilson: The diversion of the spin obviously was not helpful to the organization going into 'twenty four plus the sale of digital banking and ODM and that took a lot of resources and attention away from what.
Darren Wilson: What I just described but I think with that behind US we have one focus which is growth and growth is going to come in a number of different forms.
Darren Wilson: Part of it is just executing and getting everybody circled around that objective.
Darren Wilson: Excellent.
Darren Wilson: Just a quick follow up on the payment component there for a moment.
Darren Wilson: Understanding that on the enterprise side, obviously, that's being handled had been handled previously by other other processors that maybe we'll play them some of them on the restaurant side, but the question is I just wanted to make sure we're clear the revenue there.
Darren Wilson: We're being generated in payments in and around the enterprise side of that equation. Clearly you didn't have a rev share agreement with the prior processor, where you did I'm just trying to make sure that I understand.
Darren Wilson: Right.
Darren Wilson: Previously I don't know.
Darren Wilson: I remember what year. It was maybe 19 or so <unk> was acquired so that was a public company they acquired.
Darren Wilson: The entirety of it so there wasn't a rev share there was the traditional kind of ISO structure that was now owned by the company. So they were in the payments business that was divested in.
Darren Wilson:
Darren Wilson: I think 23.
Darren Wilson: But all of that got possess all that was divested where those accounts that were not.
Speaker Change: Software software merchant customers of NCR vortex. So the customers that were preexisting jetblue customers those were sold together with the authorization platform.
Speaker Change: The rest of the infrastructure of the payments space stayed with the company and so we've continued to be in payments. It's just we're utilizing it what used to be ours, but a third party platform now because it was sold to.
Speaker Change: To a third party.
Speaker Change: And there was no Rev share with someone else, we do not have a rev share structure in the new agreement.
Speaker Change: It is a fee for service basis that you would expect.
Speaker Change: And that's it.
Dan Perlin: And Dan It's limited only to an authorization system.
Speaker Change: So the rest of the infrastructure of the company kept.
Speaker Change: And so we have the leverage that you would expect in payments.
Fixed costs.
Speaker Change: Low variable cost high fixed costs. So we have all the fixed costs. So the more transactions, we put over that fixed cost, it's just incremental margin to the company.
Speaker Change: Perfect. That's great. Thank you so much for that clarity.
Speaker Change: Thank you.
Speaker Change: The next question is from Matt Summerville from D. A Davidson. Please go ahead.
Thanks.
Speaker Change: Couple of questions first I want to make sure I'm clear on the you know a few months ago. The posturing was basically like alright, everyone adjust their models you need to put in kind of that $100 million sort of number for hardware.
Speaker Change: We're going to have to cut over done by the end of the year.
Speaker Change: Now where the cutover is going to take the majority of it sounds like this year and now models need readjusted again, so help me understand what events kind of took place or what maybe was misunderstood initially about this transition and then I have a follow up.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: It wasn't directly me, but I was here as the executive chair at the time.
Speaker Change: So obviously two big projects going on the sale of the digital banking business. The two 5 billion for that business and at the same time, ODM and yes, you're absolutely right the expectations I wasn't on the call, but I'm assuming that the expectations as you just described.
Speaker Change: Yet that we would get this done by the end of the year.
Speaker Change: And to.
Speaker Change: To some extent a big part of that was done the European and Asia Pacific market minus Japan.
Speaker Change: Was ready for it was fit for service and there was a discussion internally.
Speaker Change: About.
Speaker Change: Going ahead, and launching half of it I was uncomfortable with that in my previous position.
Speaker Change: I believe I believe and still do that this needed to be all or nothing because the last thing we needed to do was.
Speaker Change: Great.
Questions or concerns with our customers and Thats. Our primary interest is to make sure that this is completely transparent to them.
Speaker Change: The challenge turned out debt I mean, not to get into over the weeds, but the.
Speaker Change: The provider.
Speaker Change: The provider system is an SAP system, our system is an oracle system.
Speaker Change: And the largest U S based warehouse distribution center, which is I think in Nashville.
Speaker Change: Their SAP system.
Was not able to in sufficient time to be able to manage the complexities.
Speaker Change: Around servicing our customers out of the Nashville facility and so they have pulled back and now using a third party package that I believe that you've already acquired and met with them a couple of weeks ago.
Speaker Change: And that's being implemented so we could have gotten halfway but it would just mean more confusion, obviously to you guys to kind of split it in half, but more importantly, as much as we care about you guys. We also care about our customers pretty dearly and we did not want to create any confusion.
Speaker Change: In that regard so the exact timing.
Speaker Change: I think we're just hedging we didn't get the first one right. So we're just hedging that it's going to take well into the summer and I want to make sure that we've tested and tested and tested and piloted and tested to again to make sure that we don't have any disruption to the company as you saw in what we put out you still have the net.
Speaker Change: So that is still the direction that we're heading the company in a calm is fully committed I met with the chairman and CEO and the local.
Speaker Change: <unk>.
Speaker Change: As I said, a couple of weeks ago and yes. It is very disappointing to you it's extremely disappointing to us as well.
Speaker Change: As well for our sales organization because.
Speaker Change: <unk> thought that this was going to happen and we have a number of customers. I mean excuse me employees that are kind of tied up in the mix that are supporting that business that where it's all one thing in now.
Speaker Change: We've had to tell them something else. So we take responsibility that we didn't get it done.
Speaker Change: The other with our partner but.
Speaker Change: Just like digital banking.
Speaker Change: They haven't pulled out of our infrastructure, yet either they're going to be here for probably another through the balance of this year and probably a little bit into next year.
Speaker Change: What's most important in these transactions as they go smoothly that we don't rush them out and create a problem for ourselves or for the third party and in particular for our customers.
Speaker Change: That's very helpful color.
Speaker Change: Just as a follow up I wanted to touch.
Speaker Change: The overall retail market environment, specifically, we're hearing here in North America, one of the if not the largest storefront retailer.
Speaker Change: Completely discipline are mediating the front end and looking to unbundle the extent that they can bring in point of sale software in house, which is sort of kind of an unheard.
Speaker Change: Unheard of move at least historically for this particular retailer and I guess I'm wondering if some of that type of behavior so to speak.
Speaker Change: Increasingly disruptive to sales cycles disruptive to the business just to the extent you can give a little color and insight into the sort of disintermediation and unbundling, whether this is becoming a broader trend. Thank you.
Speaker Change: Unfortunately.
Speaker Change: And.
Speaker Change: Darren can add to this originally I don't have a tremendous amount of experience watching this movie, but I've heard the stories from David and others here.
Speaker Change: As companies get larger they feel as though.
Speaker Change: Debt.
Speaker Change: It's worthwhile to have it their way.
Speaker Change: And I think some have done it and maybe some have done it successfully but at the same time they are not necessarily experts in this space. They do something else. This is just 10 gentle to what they do and they think this is and obviously I think it's representative of something that I've seen here and as I mentioned in my comments.
Speaker Change: Christian right at 2% and retention at 98%, it's hard to do what we do is extremely hard and we're investing hundreds of millions every single year.
Speaker Change: Either in Opex or capex to build and support build new systems and support systems. The lifecycle of a suite of technology changes constantly.
Speaker Change: For for the situation that you described I don't know who you are talking about directly I mean that can clearly be the case.
Speaker Change: And there are examples of it but I think Theres also examples of those who have done it that reach out to companies like us.
Speaker Change: Had that happened more recently and need the expertise that we provide when we have 13000 people. We have 4000 people that just work in engineering alone plus the product team. These are highly skilled.
Speaker Change: Professionals, who understand the complexities of making what seems to us as consumers Super easy at the point of sale how hard it is to actually pull it off.
Speaker Change: So yes that could be the case I don't have anything.
Speaker Change: As we sit here today I don't have any.
Speaker Change: Indication that any of our large accounts actually some of the biggest ones I'm heading to the U K next month and next month and a couple of weeks I guess next week.
Speaker Change: To talk to one of our large European accounts that is relying heavily on us to deliver their nextgen solution to their stores.
Speaker Change: [noise] move to their company.
Speaker Change: And one of the things in Darrington amplify this that we heard from them is how important point of sale is to their overall solution. So I.
Speaker Change: Yes, it could happen do I think it's a trend I would suspect that will be a trend, but yeah. I'm also new at this so I'll, let Darren and see if he wants to add to thanks Jim.
Speaker Change: And the reality of it is a trend that's been in the last decade, and you can repeat that in acquiring <unk>.
Speaker Change: Retailers have wanted to acquire.
Speaker Change: Acquire self purchase and self serve.
Speaker Change: And they they.
Speaker Change: Have done it and Thats, a very limited number.
Speaker Change: As many of them have actually reversed and pool by account because they realize it as Jim said, it's extremely costly.
Speaker Change: It's extremely investment heavy.
Speaker Change: But there are extremely large.
Speaker Change: <unk> or multinational retailers that will want to go down some form of that path.
Speaker Change: I think as we signposted kind of the the Nextgen software and the services agenda.
Speaker Change: Real strength points for us.
Speaker Change: Many retailers are outsourcing their entire helpdesk infrastructure to support if they're changing a hardware or software environment equally a software solution.
Speaker Change: We have a unique product called edge.
Speaker Change: And about 40% of our workflows through edge are actually enabling third policy applications. So many retailers are looking as I said about shrink solutions, so using camera systems to capture inadvertent or deliberate fraud.
Speaker Change: Some retailers are wanting it looking at biometric payment type solutions without fingerprint face et cetera to do that kind of stuff in house is pretty expensive and challenging.
Speaker Change: Enabling that even if they take some cost with that.
Speaker Change: Our platform and our edge solution will.
Speaker Change: We will be unique to support them whatever journey, they take them, but we will see that trend in terms of limited cases, but I don't think it's.
Speaker Change: A material trend that.
Speaker Change: We need to be.
Speaker Change: I think just two other points the platform that you hear a lot about from you've heard in the last call and I don't know how many calls going back but I think that is also a very differentiated solution, where you can add functionality and applications to that platform for specific customers as opposed to maybe the legacy.
Speaker Change: The way, which we still have many customers which was bespoke.
Speaker Change: Development onsite that only works specifically with your application because its so customized moving to a.
Speaker Change: Trying to get new features added to it becomes increasingly complex so without <unk>.
Speaker Change: Pursuing a similar cloud solution as we have now for our next generation.
Speaker Change: I think you know.
Speaker Change: <unk>, who are a retailer who builds it spoke to them I think will be as Darren was just saying we'll be disappointed because technology is constantly changing so you need to have the flexibility to embrace the newer technology that comes to market.
Speaker Change: Understood. Thank you guys for the color.
Speaker Change: <unk>.
Speaker Change: The next question is from Parker Lane from Stifel. Please go ahead.
Parker Lane: Yeah, Hi, good morning, and thanks for taking the question here.
Parker Lane: Jim you had a target out there under prior leadership of about 40% of the installed base on platform by 27 I was wondering with you stepping into the role. What's your updated view is on the achievability of that target and if there's any initiatives that you're looking to put in place here too.
Parker Lane: Meet or exceed the pace of that target of getting 40% of our platform.
Parker Lane: Yeah, and they offered me the position Nobody told me about a 40% target.
Parker Lane: I mean, I don't want to make a.
Parker Lane: I don't want to say, yes, or no to that it's not something that I've heard of previously I think the pace at which we're growing at 26% on the platform I think in the context of 40% of our customer base onto the platform is that reasonable in another two years or three years, Yeah. I think it's it seems to me to be reasonable I think.
Parker Lane: As I said earlier.
Parker Lane: The entire focus now.
Parker Lane: My history has been about buying companies both at Evo and global that's not the model here. The model is executing on investments that have been made here over many years and I think those investments have been.
Parker Lane: And then the right investments. So now it's really about executing and that's a challenge that we will have and so I don't see that as a.
I don't see that as a.
Parker Lane: Out of out of line for expectation setting.
Parker Lane: Understood appreciate the feedback thanks, Okay. Thank you.
Speaker Change: The next question is from Erik Woodring from Morgan Stanley. Please go ahead.
Erik Woodring: Great. Thanks, guys for taking my questions first one Tim I'm not sure if I missed it it's very top of the call, but obviously this market remains very dynamic let's call. It geopolitically and Jeff can you just maybe help us understand I realize most of this business is shifting to software and services.
Speaker Change: Yes.
Speaker Change: Kind of transaction delay.
Speaker Change: How do we think around the risks of tariffs there.
Speaker Change: Any framework that you can help us provide if there is any risk at all or how to think about that and then I just have a quick follow up thank you.
Speaker Change: I was watching T V. When I got home last night after a late dinner.
Speaker Change:
Speaker Change: It sounds like they are stretching out again into April that what I heard him say.
Speaker Change: Hey, Jeff.
Jeff: All right.
Jeff: A couple of minutes ago, Mexico, Canada tariff start March 4th China additional 10% on March 4th.
Jeff: Mike a few minutes ago, which is the only reason I ask.
Speaker Change: Well I don't have a T V on in here so.
Jeff: I didn't see that.
Speaker Change: Look if it was it Brian I think said in his comments, we have the ability to in our contracts.
Jeff: You know I haven't looked at every single one of them, but generally speaking.
Speaker Change: To be able to pass those on I mean thats.
Speaker Change: That's not good news for the customers because I think the customers will feel the same way in hardware is a very low margin business for us. So I don't think we want to be in the business of absorbing a 25% tariff.
Speaker Change: I don't want to speak about politics associated with tariffs or anything of that nature. I think will if it happens then we will address it and we will update either guidance or otherwise, but for right now.
Speaker Change: We're taking the position that.
Speaker Change: A wait and see more then.
Speaker Change: Taking <unk>.
Speaker Change: <unk> guidance as a result of a comment that made it sounds like it was made this morning like I said last night. It sounded like it was April so I figured yeah, we had a month or so.
Speaker Change: This is a new administration, so we'll see what happens.
Speaker Change: Totally understand.
Speaker Change: I wanted to.
Speaker Change: I'll get to later, how completely understand I appreciate that perspective.
Speaker Change: Maybe Brian.
Speaker Change: Could you, maybe just better help us understand.
Speaker Change: Longer term I'm, just thinking directionally about the kind of path of monetization when we think about the relative growth should IRR and platform side.
Speaker Change: Creasing mid to high single digits, and 25% software and services was up low single digits. When you adjust for kind of the one timers in the licenses.
Speaker Change: When should we just kind of expect maybe those growth rates to converge a little bit.
Speaker Change: A little bit more is it really just about firing on all of these subscriptions to get to that point or.
Speaker Change: Is there anything else that's kind of holding.
Speaker Change: Going back kind of the actual reported revenue relative to some of the greater success, you're having in and the growth of like an IRR and platform side. Thanks, So much.
Speaker Change: I'll take a piece of that and then Brian can add.
Speaker Change: We recognize that we have 8000 people not all of them in the field. We have 8000 people a lot of them are billing time and services to that so that's a model that we're addressing part of that is subscription, but theres other aspects to it.
Speaker Change: If you look at just the pure software side the revenue coming from software that is growing fast what much much faster the issue.
Speaker Change: Really relates to how we address.
Speaker Change: Our service business in terms of how we are.
Speaker Change: Compensated for the commitment and effort that we make too.
Speaker Change: To service our customers on site that has more of an impact than the software aspect.
Speaker Change: I would just say the positive is we won the ODM agreement goes live will be 80% recurring we expect that recurring to grow 4% to 5%.
Speaker Change: This year.
Speaker Change: We talked about payments today, continuing with our platform. Our next gen products. So theres a lot of things that help us going forward is that nonrecurring becomes smaller.
Speaker Change: And again on the payment side, not because I came from payments, but payments and software are aligned for a number of years as a repeating again and so on.
Speaker Change: I would expect you'll see another significant driver.
Speaker Change: Of revenue.
Speaker Change: Similar to others in our industry that will.
Speaker Change: Will.
Speaker Change: Help accelerate <unk> and just the overall growth. These are multi year contracts that you entered into in the payment space.
Speaker Change: Okay.
Speaker Change: If I could just follow up on that very quickly.
Speaker Change: The point you were making at the top of the Q&A. When you were talking about having close to 700 million with 150 billion in volume.
Speaker Change: I had to do is kind of compare it to the fact that earlier in the earlier in the call you were talking about 2024.
Speaker Change: Your customers here at NCR voice processing 500 billion.
Speaker Change: Is that kind of how we should be again, not saying that thats. How would you think about revenue, but that's kind of the relationship that we should be thinking about here, yeah don't think of that as $500 billion of revenue.
Speaker Change: Yeah.
Speaker Change: Well, then five we're very global payments and the rest of them would we'd be very happy if they could.
Speaker Change: Right.
Speaker Change: We'll be at that right now the idea is these are large.
Speaker Change: Much thinner margins than what I would've seen a global we had more of a mix or at Evo, we had more of a mix of large customers and small, but it was probably more oriented to the small smaller merchants larger margins, but the idea is 500 billion is a big number 12 billion transactions a year is a big number and those are large.
Speaker Change: <unk> untapped.
Speaker Change: And where.
Speaker Change: Our restaurant business that was put into place again with the jet base story.
Speaker Change: Think today, we're almost we're at 100%. So every time, we sign a new customer we have payments attached to it. Unfortunately, because there were not the capabilities within that application or that platform. We couldnt do the same.
Speaker Change: On the retail side, so now because.
Speaker Change: <unk> is a leader in that space and they have all those capabilities. We can now take advantage of now theres going to be a price that we have to pay for the access to their system, but we've worked out it I think.
Speaker Change: An economic deal that will allow us to offer value to our customers. So that when we sign up retailer X y Z, whether it's a restaurant or fuel, we're not only offering down.
Speaker Change: The software the services, but now we can offer them payments and they have asked for payments. We just have not had the capability of doing it and the <unk>.
Speaker Change: 500 billion is just the U S that number is is double that when you look at the entire footprint, but that's going to take even longer the U S will be in business.
Speaker Change: As early as the spring for new customers and we will get the base converted over my expectation is by the end of the summer.
Speaker Change: And then at that point in time or even earlier, we hope to talk about other markets that we're starting to open up again.
Speaker Change: Payments not to replace what we do for a living but to complement it it's a better experience for the customer the one throat to choke so to speak they don't have to have two different players involved as long as we can be economically viable then I think we can sell to the base effectively as well as sell to new customers.
So kind of a sense and thank you for that color guys. Good luck alright. Thank you.
Speaker Change: There are no further questions at this time I would like to turn the floor back over to Jim Kelly for closing comments.
Jim Kelly: Thank you operator, and thank you all for joining us and for your continued interest in NCR of Wix and have a good day.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Jim Kelly: Okay.
Jim Kelly: Okay.
Jim Kelly: [music].
Jim Kelly: Okay.
Jim Kelly: [music].
Jim Kelly: Yes.
Jim Kelly: [music].
Jim Kelly: Yeah.
Jim Kelly: [music].
Jim Kelly: Yes.