Q1 2025 NCR Voyix Corp Earnings Call
Speaker Change: Greetings and welcome to NCR Voyix First Quarter 2025 earnings call. At this time all participants are on a listen only mode. A question and answer session will follow the formal presentation.
If any of which require operator assistance during the conference, please press and stars you on your telephone keypad.
Speaker Change: That's a reminder this conference is being recorded. I would now like to turn the globe to your host, Sarah James Schneider. Thank you, you may begin.
Speaker Change: Good morning and thank you for joining our first quarter 2025 earnings conference call. This morning we issued our earnings release reporting financials for the quarter and in March 31, 2025. A copy of the earnings release and the presentation that we will reference during this call are available on the investor relations section of our website which can be found at www.ncrvoix.com and have been filed with the SEC. Thank you for your time.
Speaker Change: With me on the call today, our Jim Kelly, our Chief Executive Officer, Brian Webb Walsh, our Chief Financial Officer
Benny Tadele, President Restaurants
Speaker Change: Beren Wilson, President Retail, and Nick East, our Chief Product Officer. This call is being recorded and the webcast is available on the Investor Relations section of our website.
Speaker Change: Before we begin, please be advised that remarks today will contain four of the Dean's statements.
Speaker Change: These four-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 four-looking statements.
Speaker Change: For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC.
Speaker Change: We caution you not to place any reliance on these statements. Overlooking statements during this call speak only as if the date of this call and we undertake no obligation to update them.
Speaker Change: 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.
Speaker Change: For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable gap measure and importance of SEC regulations, please see our press release furnished as an exhibit to our form A.K. file this morning and our supplemental materials available on the Investor Relations section of our website.
Jim Kelly: With that, I would now like to turn the call over to Jim.
Jim Kelly: Thanks S.J. and good morning, everyone. I would like to welcome all of you to our first quarter earnings call. Before beginning, I would like to introduce Nick East, our Chief Product Officer.
Jim Kelly: In his new role, Nick will direct our investments in platform solutions to meet the growing demands of our customers and the market.
Jim Kelly: Further, we now have two executives based outside the United States which will provide a broader perspective of international trends and bring us closer to our global customer base.
Jim Kelly: Turning to our recent performance, this quarter we saw a new mid-market and enterprise customers in both our restaurant and retail segments. Expanded key existing relationships and signed customers to the platform.
Jim Kelly: We also progressed on implementing our hardware OVM and our new cloud acquiring capabilities. While our results were in line with expectations, work remains as we accelerate deployments, transition hardware and exit one time revenue streams in favor of recurring subscription billing.
Jim Kelly: As we'll outline today's remarks, we're making progress on our cloud-native platform.
Jim Kelly: and Payment Initiatives, which will launch during the second half of this year and drive revenue growth leading into 2026. While early days I am encouraged by the traction we are beginning to see on our growth initiatives to improve future performance.
Jim Kelly: Since our last call, I have met with more than 40 of our largest customers across the US, Latin America, and Europe to gain constructive feedback and reinforce our commitment to excellence and software and services.
Jim Kelly: Our market-leading position in restaurant and retail is backed by our unmatched global presence of marquee customers and these relationships are key to both our current positioning and go-forward strategy.
Speaker Change: These customers are eager to learn about the platform strategy embedded in our next generation solutions. Nick Benny and Darren will discuss our product execution later on the call. I will now provide an update on our hardware business both as it relates to the recent tariff announcements and our ODM transition.
Speaker Change: In 2024, the US market represented approximately 60% of our annual hardware sales as it pertained to self-check out and point of sale hardware finished in Mexico.
Speaker Change: During the later part of the quarter, we began receiving tariff surcharges for certain service parts from a limited number of our China-based suppliers.
Speaker Change: This trend has continued, but not accelerated into the second quarter [inaudible]
Speaker Change: The current run rate of tear-related costs is between $8 million and $12 million for the balance of the year or up to $20 million if all suppliers implemented surcharges.
Speaker Change: In parallel, we have initiated actions to mitigate some of the impact by sourcing suppliers in markets where tariffs are lower or do not apply.
Speaker Change: As we said in the last call, the implementation of our ODM agreement with Enacom is on track for pilot this summer and is expected to be operational by your end.
Speaker Change: Our partners area focus since December has been the installation of a third party application to manage the Nashville warehouse which supports all markets outside the bureau.
Speaker Change: We will begin piloting across our markets later this summer and anticipate a full transition by urine.
Speaker Change: Turning to payments, we're in the process of integrating world-paced front-end processing capabilities into our customer offering, anticipated to be operational by the end of the summer.
Speaker Change: As such, we have recently launched payments training for our sales teams to enable initial dialogue with existing customers, not currently utilizing our payment solutions.
Speaker Change: Given a positive feedback that I received from my customer meetings, I'm optimistic about our ability to both convert the base and attract new customers to our payment acceptance solution.
Speaker Change: As an example, while early days, we have recently renewed Enterprise Restaurant customer who will leverage our new end-to-end payment offering once available. We will continue to work to operationalize our international markets over the next six to twenty-four months.
Speaker Change: Turning to our Capital Allocation Priorities in March and April , we completed an additional 25 million of share repurchases amounting to 2.6 million shares under our existing program.
Speaker Change: Since the beginning of the repurchases in November , we have repurchased approximately 10 million shares for a total of $125 million for $1 million.
Speaker Change: Our Board recently adopted an amended share program which increased the total aggregate purchase authority under the company's share repurchased program to 200 million. The company will consider the timing of buybacks together with other uses of cash, such as investments in products and infrastructure.
Speaker Change: Lastly, before I turn the call over to Nick, I would like to provide context for a Voyix Commerce platform strategy.
Speaker Change: For more than 20 years, the company has acquired over 40 on-premise.
Speaker Change: Software applications, most of which are still in use today, serving our restaurant and retail customers.
Speaker Change: In 2019, the company shifted its product strategy from acquiring third-party applications to developing in-house cloud architecture and edge microservices to deliver platform benefits to our customers.
Speaker Change: This was the genesis of the Voyix Commerce Platform, or VCP, initially developed with the capability of the dollars to connect legacy applications.
Speaker Change: to the cloud. Later this year, we will begin launching VCP's cloud native and edge applications to existing and new customers as we sunset the sale of our legacy on-friend applications.
Speaker Change: The VTP will enable our customers to transform their physical locations into digital experience channels for shoppers and diners.
Speaker Change: We are excited about the potential of a platform-powered business to mutually accelerate growth for our customers and for NCR Voyix.
Speaker Change: To ensure this remains central to the company's transformation, we have appointed Nick Ease to lead our product strategy under VCP. Nick?
Thanks, Jen. Good morning, everyone.
Speaker Change: Before I begin, I wanted to introduce myself as NCR Voyix's chief product officer.
Speaker Change: I built the career successfully developing and delivering highly scalable software products for customers worldwide and I'm excited to continue this journey with the Voyix Commerce platform and for the opportunities it represents for both the company and our customers.
Speaker Change: I've been with the company for the last six years after selling my Edge software technology company is in strut to NCR in 2019.
Speaker Change: In that time, I worked closely with our engineering and operations teams to integrate this software into the platform and with our retail and restaurant customers.
Speaker Change: The VCP was created to enable customers to improve their business and financial outcomes, to enhance digital delivery, better data-driven decision making and the more agile ability to rapidly innovate and integrate new technologies by computer vision and AI.
Speaker Change: In addition, the platform reduces IT operational costs, greater security, shared hardware, and improved labour productivity.
Speaker Change: NCR Voyix has the experience, scale and market leading positions to build, deploy and operate our customers' technology environments, enabling them to seamlessly transact and compete in the market.
The software products, like buildings, require good architecture.
We have pressure tested that architecture.
Speaker Change: Its performance, its scalability and its agility with CIOs, CTOs, and TSOs in some of the largest global companies and further confirmed it with an independent third party.
Speaker Change: The platform is the architecture on which all of our applications are aligning and how we will deploy our new capabilities, including payments going forward.
Speaker Change: As Jim said, we're now launching our new cloud native applications via the BCT and sunsetting the sale of our legacy applications.
Speaker Change: There are a number of products across a range of retail and restaurant verticals we are bringing to market this year all built upon the BCP.
Speaker Change: These solutions are developed once with capabilities that serve many and a soul through multi-year subscription contract with escalators.
Speaker Change: Distrategy benefits our customers, allowing them to access enhanced data and the ability to drive innovation.
Speaker Change: Ferentiovoix, this represents increased recurring revenue streams and improved software margins.
Benny: With that, I'll turn the call over to Benny, to discuss our restaurants before.
Benny: Thanks, Nick. In the first quarter, our restaurant business signed nearly 200 new software and services customers. Our platform and payment sites increased by 5% and 6% respectively.
Speaker Change: Software ARR and Total ARR are both decreased 1% in the quarter. However, when adjusting for the timing of certain items, software ARR and Total ARR both modestly increased.
Speaker Change: In our Enterprise Division, we won a multi-year platform and payments contract with Ziggy's coffee. A rapidly growing drive-through and coffee house shop was nearly 150 locations across U.S.
Speaker Change: As part of the agreement, we will provide Aloha Point of Sale, Aloha Sales Manager, and Voyix Bay, in addition to hardware maintenance for their entire store footprint and support their continued store expansion.
Speaker Change: We also renewed and expanded our relationship with Raising Cains, a fast casual chain in the US, signing a multi-year platform contract for 850 locations nationwide.
Speaker Change: As a result of our new contract, we connected raising gains to the platform to enable them to minimize costs and disruption as they continue to grow their brand.
Speaker Change: Lastly in April , we renewed an expanded out relationship with Buffalo Wild Wings, signing a four-year
Speaker Change: Highlighting what Nick and Jim described earlier, Aloha Menu is a great example of how we are bringing new innovations to the market via the Voix Commerce Platform in 2025.
Speaker Change: Aloha Menu is a standalone menu management system that allows restaurants to centralize the building and maintaining of their menu across all geographies and channels, including POS, kiosk, mobile and online ordering.
Speaker Change: While the LOHA menu is integrated to a LOHA point of sale, it is also designed to integrate with any restaurant point of sale application, including competitors.
Speaker Change: This is a competitive differentiator for us, enabling us to work with restaurants regardless of the point of sale provider. We anticipate strong interest in the Lohan menu as we prepare to launch it later this year.
Speaker Change: In addition to leveraging our software and hardware, Buffalo Wild Wings will continue to leverage our deployment services and our service desk for their restaurants.
Speaker Change: Finally, in our mid-market business, we continue to demonstrate consistent payments attachment at 97% for new customer signings.
Speaker Change: Our focus is now on attaching Voyix Fates to our existing base given our expanded capabilities.
Speaker Change: As Jim previously mentioned, we are already in early conversation with certain of our enterprise customers to be able to extend Voix Bay and look forward to accelerating our payment execution once we are operational with World Pay later this year.
Speaker Change: I will now turn the call over to Darren to discuss our retail performance
Darren.
Darren Wilson: Thanks, Benny. Good morning, everyone. In the first quarter, our retail business signed more than 30 software and services customers. Our platform and payment sites increased by 48% and 14% respectively.
Darren Wilson: While we have not previously reported payment sites through retail, we have offered payments to certain SME customers in the US, and will now report sites going forward, given our relationship with the world pay.
Darren Wilson: Software ARR increased by 9% and total ARR increased 4% in the quarter.
Darren Wilson: As previously mentioned, this quarter we continue to introduce our next generation applications to meet the demands of our existing customers and the larger market ahead of our expected launch dates later this year.
Darren Wilson: For example, as we recently announced, we renewed and expanded our relationship with Morrison's, one of the largest supermarket chains in the UK to upgrade their install technology from Legacy NCR point of sale to a full suite of VCP solutions.
Darren Wilson: In addition to Voyix pods and self checkout, we will provide Morrison's with software and hardware maintenance services and a hardware refresh.
Darren Wilson: Further, Morrison's will implement our low-hard solution for their in-store cafes.
Darren Wilson: This multi-year commitment will provide Morrison's with increased speed to market, enhanced shopping experiences and streamlined checkout.
Darren Wilson: Additionally, our VCP point of sale and self checkout are now live at several locations in the US, and we are focused on executing additional rollouts this year to further support our customer's strategic goals.
Darren Wilson: We also have four other grocery, fuel and convenience customers for whom we will roll out our VCP point of sale later this year.
Darren Wilson: This quarter we continue to execute on our strategy, expanding an existing point-of-else software contract with grocery outlet for two and a half thousand lanes across five hundred sites in the US.
Unknown Speaker
Speaker Change: We will now provide them a path for platform connectivity as we roll out VCP point of sale for enterprise followed by mid market grocery.
Speaker Change: In our convenience and fuel division, we renewed and expanded our relationship with pilot company.
Speaker Change: Signing a new five-year agreement for our VCP self-check out, spanning nearly 1,000 lanes across 280 sites in the U.S.
Speaker Change: In addition, self checkout, we will provide other value added applications to help Plylar improve the guest experience and further streamline their operations.
Speaker Change: Finally, we expanded our relationship with Mr. Tan, Mr. Shokie, one of the oldest and largest departments stores in Japan, effectively doubling our hardware technology footprint while displacing the incumbent.
Brian: With that, I will turn the chord over to Brian . Brian ? 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 $617 million, decline 93 million, or 13% [inaudible]
Brian: As expected, due to continued softness in hardware sales and related installations of 67 million and X-Teen 20 million of one-time software and services revenue, including the termination of NCR at Leos Commercial Agreements.
Brian: Recurring revenue increased 2% to 407 million and now represents 66% of total company revenue.
Brian: Software ARR in total segment ARR increased 5% and 2% respectively, and platform sites increased 27% to 77,000 sites.
Brian: Adjusted EBITDA increased 19% to 75 million in the quarter as margin expanded 330 basis points to 12.2%. This was largely driven by our 2024 cost actions.
Let's turn to our segment results.
Brian: Beginning with restaurants, recurring revenue decreased 1% to $138 million due to the timing of certain revenue items. This coupled with the expected hardware and other one-time declines resulted in total segment revenue declining 5% to $191 million.
Brian: Sagman Adjusted Yvra increased 7% to 59 million, as Margin expanded 370 basis points to nearly 31%. This improvement was driven by our efficiency initiatives and sales mix.
Brian: Turning to retail, recurring revenue increased 4% to 265 million, driven primarily by the ramp of a new large customer agreement, this together with the expected hardware and other one-time revenue declines resulted in total segment revenue declining 14% to 420 million.
Brian: Segment Adjusted Evita, Decreased 24% to 65 million, primarily due to the declines in hardware revenue and gross profit.
Brian: Lastly, corporate and other expenses decreased 37% to 49 million, which reflects the cost initiatives we implemented in 2024 and 2025.
Brian: Adjusted for cash flow was a use of 20 million for the quarter before considering 33 million of cash expenditures related to restructuring and other strategic initiatives. This reflects normal seasonality coupled with the timing of certain cash receipts from customers totaling 40 million which were subsequently received in April .
Brian: We originally estimated digital banking-related tax payments of $375 million, and in February we reduced this estimate to $325 million. We are now further reducing these payments to $304 million, $20 million, which was paid last year, and $284 million, of which was paid in Q2.
Brian: We repurchase to approximately 5 million shares for 62 million during the first quarter. From November , 2024 through April , 2025, we repurchase to approximately 10 million shares for 125 million
Brian: Our board has adopted an amended share repurchase program which increased the total aggregate repurchase authority under the company's share repurchase program to 200 million.
Brian: Future Sherry Purchases will continue to be part of our capital allocation strategy together with investments in products and infrastructure .
Brian: Turning to our outlook, as Jim mentioned, we are estimating the current run rate of tariff-related costs to be between 8 million and 12 million or up to 20 million if all suppliers implemented surcharges.
Brian: At this time, we are implementing mitigations and maintaining our guidance for the year. We'll continue to monitor the evolving trade and tariff environment.
Brian: We continue to expect currency neutral revenue to range from 2.575 billion to 2.65 billion, which reflects a 9-6% decline driven primarily by hardware. We expect the rate of revenue decline to improve throughout the year as revenue ramps on sign deals and as we execute our initiatives.
Brian: Currency Neutral Adjusted Evita is expected to range from 420 million to 445 million, representing an increase of 21 to 28%.
Brian: Adjusted EBITDA margin is expected to improve 400 to 450 basis points and range between 16.3% and 16.8%.
Brian: non-GAAP Deluded Earnings for Shared is expected to be between $0.75 and $0.80 and adjusted free cash flow for the year is expected to be between $170 million and $190 million when excluding restructuring, digital banking-related taxes, and accelerated platform and product investments.
Brian: This reflects an adjusted conversion rate of 40 to 43%. With that, I'll turn the call over to the operator to begin our question and answer session. Operator?
Speaker Change: Thank you. At this time, we'll be conducting a question and answer session.
Speaker Change: If you'd like to ask a question, please press star one on your telephone keypad.
Speaker Change: A confirmation to all indicate your line is in the question, Q. Thank you.
Speaker Change: You may press start 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 a person is
One moment please, Robby Pollett for questions.
Speaker Change: Our first question comes from Matt Summerville with D.A. Davidson. Please proceed with your question.
Matt Somerville: Thanks. Morning. A couple of questions. First, in the compared remarks, you talked a little bit more about
you know, some self-checkout wins, maybe relative to...
Matt Somerville: More so relative to what you've talked about maybe last quarter. And I guess I'm wondering if you're starting to see a broader inflection in demand after a pretty tough 2024 in that business knowing
Matt Somerville: that in particular drives a pretty nice software and services attached, so maybe if you can give more of a broader update on what you're seeing there, then I have a follow-up.
I'm at Darren here. Thanks for the question. Yeah, insightful
Speaker Change: but also with various measures around the world trying to optimize people.
Speaker Change: and some supplement people for automation. There is a continued interest in self-check out across all markets.
Speaker Change: We're seeing it in every territory we're operating. So yes, we announced the good win there, which was great.
Speaker Change: but ongoing dialogue which has been consistent really throughout last year.
Speaker Change: as retailers are really searching for those types of solutions. They're also, however, looking for...
Speaker Change: You know and as as we've talked to the platform agenda looking at platform innovation and using the self checkout really is a core source of getting data be that loyalty or or just a pricing personalized pricing or other initiatives. .
Speaker Change: So it's actually a linked agenda rather than just the independent self-checkout. It is linked to a platform strategy.
Speaker Change: Yeah, maybe I could make one of the comments. You mentioned it's important from the perspective of software
Speaker Change: But we can also, with our platform, we're high by Agnostic, so we can actually reuse.
Speaker Change: Existing self-check out hardware and the self-check out hardware of our competitors and others so we don't require a new self-check out sale, new capital investment from our customers in order to land our next generation platform and deliver value from the self-check out software.
Speaker Change: That's helpful. Appreciate the color there. Maybe you've just won on the cost side of things.
Speaker Change: Hugh Update, the latest with respect to Voyix's restructuring plan, how much you expect to spend this year, how much you expect to benefit from cost outs and the associated timing, and then maybe just a little bit of more granular detail on your mitigation actions, specific mitigation actions with respect to tariffs. Thank you.
Speaker Change: Hey Matt, I'll start. So if I think about the cost program this year, we sized it at 100 million at the beginning of the year that started ramping in Q1, but ramps as we go through the year. We initially said we need about 55 million of restructuring and transformation to enable that. That's probably up a little bit higher now at about 65 million just because there's more restructuring and one of the mitigations as we think about tariffs is looking at cost. So we're looking at our cost programs to see if we can up size them. We're looking at our cost programs to see if we can up size them.
I don't know if there's anything you want to add.
Matt Somerville: I would say that we are most of the way through. I wouldn't suggest that all the efforts to right size the company as a stand-alone software business is complete, but the vast majority is. There was a small amount taken in the first quarter.
Matt Somerville: But again, we described that on the last call that we were on.
Matt Somerville: As it relates to the tariff mitigation, I mean some of that I think is going to be something we'll keep to ourselves but I think we're broadly as I said in the script. We're going to look for other vendors or suppliers that would be either in lower or non tariff markets. We're going to look for other vendors that would be in lower or non tariff markets.
Matt Somerville: to deal with an unknown as to how long this is going to go on. We have conveyed to our—
Matt Somerville: to our suppliers that we would prefer they not pass them on and thus far we've seen not a significant run rate as they said in the comments.
Matt Somerville: So right now, I mean, this is an ever changing landscape, I think there's a call this morning about a deal that was just done with the UK market, so we'll stay tuned but for right now we'll feel good where we are.
Thank you. Appreciate color.
Yep.
Speaker Change: Our next question comes from Dan Perlin with RBC Capital Markets. Please proceed with your question.
Dan Perlin: Thanks, good morning. I wanted to just kind of double down in on payments again, Jim, so you talked about, I think, world pay converting the front-end capabilities you're launching this training program.
Dan Perlin: Sounds like you're having positive feedback. I want to just make sure I understand.
Dan Perlin: and the distinctions here. Where does all of that really stand in terms of timing and launch, and then again, what's the conversation like with?
Dan Perlin: With clients, I also appreciate this new KPI in retail sites that it sounded like was related to world pay on on smaller I guess that's a V clients, so I'm just trying to reconcile all of those things
That would be
Dan Perlin: Okay, at least it's starting point. Thank you Dan. I'll take the last first. So in the past because it was more oriented to restaurant given the simplicity of the joint jet pay front end.
Dan Perlin: The company historically just talked about restaurant as opposed to retail as it turns out for the smaller retail customers, so mid market versus enterprise.
Dan Perlin: predominantly quick service or maybe some supermarket, there were some customers in here, so we've just started to report that publicly, it was otherwise embedded in the numbers.
Dan Perlin: Software and Services, I'm guessing in the past. The expectation is that number is going to continue to grow over time.
Dan Perlin: And then specifically to the process, I think it's well down the path, I mean, world-paced irrespective of the fact that it just did a merger, the rest of what we're doing is continuing on track.
Dan Perlin: There's a number of former evil people here, so people who have a specific experience both with operating in payments, but also out.
Dan Perlin: with conversions, and so the expectations they said in the comments would be some time in this summer, hopefully earlier than later. We do have a conversion to complete. So the customers that are currently processing on jet pay will move over to world pay and the expectation will have that.
Dan Perlin: All completed by the end of the summer. I think the last piece would be on conversations with customers about the opportunity of doing business with us.
Dan Perlin: Now, all of them that I've had, so the 40 that I've met with, today,
Dan Perlin: I wouldn't say all of them were oriented initially around payments, but in every conversation I've had and these are at the CIO level, they're interested in the opportunity to have essentially one relationship as opposed to multiple relationships to be able to offer the.
Dan Perlin: A solution that avoids complexity, which is what I think some of them are doing with, but having said that we also have a significant number of customers that are already connected through.
A product that we call the Wave's Connect Act.
Dan Perlin: that were leveraging those relationships. It's well over 700 million on that platform today.
that are today also… [inaudible]
Dan Perlin: directed to other processors as opposed to NCR, and so going forward.
The conversations are about.
Dan Perlin: Completing the cycle all the way through the authorization, the rest of the capabilities.
Dan Perlin: We retained when the jet pay business was sold back in processing and all the rest of but what requires to be an acquirer is already resident in the company.
Speaker Change: Yep, got it. That's super helpful. And then just quickly your comments around having two executives outside of the U.S.
Um.
Speaker Change: Presumably, to help with international enterprise clients. Was that an area of a weakness? I mean, it's a big part of the organization obviously outside of the United States. And so you call that on your prepare to mark. So I just figured I'm tied down on that one. That's all I'm talking about.
I don't think of Darren's week. I think it was.
Speaker Change: Look, when you run global companies and everything's oriented out of one market, it's one way of thinking. So we now have two executives that report to me that one of which has been here. I think Nick said six years. Right. Yeah.
Speaker Change: So the perspective of our customer base, which is not oriented entirely to the US, it's spread South America across Europe and Asia.
Speaker Change: We actually have another executive who's now, who's been moved to, or moved himself to Japan.
Speaker Change: So we are domiciling across our customer base and I think it just helps as we make decisions as a company understand the needs of our customers to have people that are embedded in those markets as opposed to everything sitting in Atlanta was it up.
Speaker Change: Oriented Plan, though, but as you well know, Darren and I have worked together together.
since the global days, and then Ebo, and... [inaudible]
Speaker Change: He's a very accomplished executive. I'll never say that I get out loud, but I'm saying at this time, and Nick is earned his stripes here. He's been here for six years, extremely well respected as you can hear in his prepared remarks. Thank you very much.
He understands the business .
Speaker Change: from the core level up, and he's going to be a huge addition to what he described.
Speaker Change: Ian is prepared comments as we roll out the platform and the capabilities of the platform to our customers.
Speaker Change: All of which that I've spoken to are very excited about us finally getting to that point. It's been a quite a journey. I know there's been, you know, from a shareholders perspective, a big investment in the platform, but as Nick said in his comments, there's plenty other customers, companies that do this.
Speaker Change: and for us to remain viable in the marketplace. This is a great next step and our customers are excited about getting access to it, some of which already in market today operating.
That's great. Thank you very much.
Yep, thanks Ian.
Speaker Change: As a remind if you like to ask a question, please press star one on your telephone keypad. One moment, please, while we pull for questions.
Speaker Change: Our next question comes from Erik Woodring with Morgan Stanley . Please proceed with your question.
Great. Thanks so much, guys, and good morning.
Speaker Change: Jim, I was wondering if you could maybe share a few more granular comments or thoughts on just the evolving macro backdrop, not necessarily anything related to tariffs, but obviously two end markets here that can be sensitive or prone to sensitivity related to the economy.
Speaker Change: Obviously, a lot of moving pieces creates a lot of uncertainty. Then again, there's a lot of recurring revenue in this business offset by some hardware and services dynamics. And so I'm just wondering in your conversations, whether that was in March or now how it is evolved into the month of April in early May.
Speaker Change: What are you hearing? What are they saying? Is there any is there any concerns? Is that impacting spending plans? We just love maybe a bit of more granular color there and then a quick follow-up please thank you.
Okay.
Speaker Change: I'm interested in one of these during our board meeting, one of the board members asked something similar about how our customers are feeling in light of
Speaker Change: You know, the tariffs in particular and the impact kind of shocked to the world economy. I would say part of what you just described, if you look at the customer base here, we're a B2B business as opposed to a B2C business. [inaudible]
Speaker Change: So we have long standing relationships that are well embedded and they're trying to meet the needs of their customers many of us not all of them are on much older equipment that we would like them to be on equipment being the software, not just the hardware we are.
Speaker Change: and so I have not heard or seen in any of the conversations I've had with those 40 odd customers, nor has anybody sitting in the room with me had given feedback that there's a pullback. Let's go.
Speaker Change: that we're seeing with our customers. I think it's complete the opposite.
Speaker Change: that we had a good start to the year. It's still a decline. On the hardware side, I was in here during COVID, but my last company there was a lot of pull forward of hardware sales during the slowed out of COVID and I'm sure.
Speaker Change: NCR experienced some of that as well, and we're starting to see a little bit better demand still down on the hardware side, but in particular what Nick described on the
Nick East: On the product side or the platform side, our customers are eager and signing new deals to be able to upgrade to that every every month and my expectation is that's going to continue for the year. Now I think on the tariff side, I don't think any of us have a crystal ball except one guy.
Speaker Change: That's not on the call but my killing is this is going to come to a head and it's starting to come to a head if we're starting to announce publicly the deals that are getting struck. up.
Speaker Change: So, we feel like we're in a good space today and as Brian outlines, we're maintaining our guidance largely because of the relationship with our customers of many of which go back 20 years from 30 years that I think we're in very good space.
Speaker Change: Okay, that's really helpful. Thank you. And then Brian , maybe just a quick follow-up.
for you.
Speaker Change: Or, excuse me, or down, not either one is just what when I look at the retail business obviously there was a degree of hardware declines associated here that we can see. Is that really the explanation for the step down and gross and adjusted EBITDA margins was there anything else of note there just.
Speaker Change: ARR up nicely, KPIs showing progress. So, should we really just be thinking of that as hardware and kind of where does that dynamic go, again specifically on the margin front for our retail? Thanks so much.
Speaker Change: So, starting with the software and services for the overall company, we had about a 7% decline in Q1, two points of that roughly was driven by
Speaker Change: So that would be five if it wasn't for that two point impact and we see that improving in Q2 as we ramp our new deals.
So that's kind of a comment that...
Crosses both restaurants and retail .
Speaker Change: When we look at the retail margin in Q1, it was impacted by the hardware decline, but also a mix of what we sold. Some of the especially third product products has a lower margin, and so that mix really drove that margin down. We see that recovering in Q2 for the, you know, full year we still think the margin will be 19 to 20% for retail. Now, let's take a look at the retail margin.
Awesome. Thank you guys. Good luck.
Thank you, thanks [inaudible]
Speaker Change: Our next question comes from Will Nance with Goldman Sachs. Please proceed with your question.
Will Nance: Hey, thanks for taking the question. Jim, I'm wondering if you can talk a little bit more about the pitch to retail clients on the World Pay Partnership, just from a painless perspective, which I know you know very well.
Speaker Change: I usually think about large retail, customers are getting very, very low processing rates for the volume that they put through, and so I was wondering if you can maybe talk from a take great perspective.
Speaker Change: and about the opportunity that Voyix has to kind of share in that economics. How do you kind of think about, you know, the overall processing rates and then, you know, the, the amount of the economics that, you know, that you would take versus versus more pay. Thanks.
Speaker Change: Sure. So there's two components of this. So there's the processing relationship. So think of a point of sale processing relationship. There's a piece of software. There's a piece of software.
That's the company.
Speaker Change: created, or one of it created or bought back in 2014, which has historically been called connected payments.
Speaker Change: So connected payments, you would think of companies like Freedom Pay, ACI, third parties that provide.
Point-to-pointing corruption, tokenization.
Speaker Change: A variety of payment-related capabilities. That has been resident here, I guess at dating back to 2014 and that's
Speaker Change: Today, well over six or seven hundred billion that process through it. So our point of sale, I think I said in the last call, if you look at all the point of sales globally.
Speaker Change: And Connect Today is oriented to the US, although we have gateway-like capabilities in other markets, which we will normalize at some point over the next.
Speaker Change: I think we said six to 24 months as we stand up for a pay.
So, Dad,
Speaker Change: That application normalizes any changes we make at a point of sale.
Speaker Change: to the processor and in the past the processor are all the name suspects that you would see in the US at scale that can process for petroleum or for supermarket which are the two big drivers in that segment.
Speaker Change: So I think we have two conversations with our customers, but I think we're having two conversations with our customers. One on the middleware piece, the Connect piece.
Speaker Change: as opposed to using a third party, you're using our capabilities and most of them are but a lot of them are on subscription.
Do we're moving away from-
And that's a description of one-time life and for no fees, we're moving away.
From that is the structure.
Speaker Change: And then separately, which I think is the heart of your question, how do we win at the point of sale?
Speaker Change: that we have a, I think, a very commercially reasonable relationship with World Pay.
Speaker Change: and it was geared in the conversations I had with them as I handled this myself.
Speaker Change: We recognize the customer base that we would be together processing for. So, you know, it's still early days, but in the end, I think we're going to be competitive. Will we win them all? I mean, that's my objective. I don't think that's going to happen.
Speaker Change: I think the takeaway for the customer is you then have one relationship, not just at the point of sale, but all the way through payments because at the end their point of sale is the only way the businesses operate. That's where the cash comes in.
Speaker Change: changes at the point of sale versus changes at the processor to the extent that there are. [inaudible]
Speaker Change: Changes that are not aligned, then you have outages and so what we offer is a single solution and you've seen this yourself over the last. [inaudible]
Speaker Change: 10 years, 15 years, into payments and software space, any small ISV, they're all doing the exact same thing. There's a company called Toast that I've heard about, and I think they did the exact same thing. So it's not like we're doing something novel.
Speaker Change: We're probably more late to the party, but we have the capabilities already, and with world pay, we've extended those capabilities to what ultimately the customers need. [inaudible]
Speaker Change: Darren wants to add to some things to go in. And Will, I think it's not just retail, it's restaurants as well that we're having these conversations within. And yeah, there will be probably some of the mega merchants that will be on very fine commodity-based pricing for standalone payments.
Speaker Change: But this actual, the pitch, as you requested in your question, or covered in your question, really is...
Speaker Change: is a total value-pitched and merch is Nick and I said that the first question answer to Matt was many customers are really looking at.
Speaker Change: The whole end-to-end integrated solution and a platform and a data player and an insight play.
Speaker Change: and joining the payments to the pause at the front end really does build a true end-to-end holistic data and insight solution for loyalty, spend, patent, behaviour, patent, etc. So, this is a broad benefit pitch than purely.
Speaker Change: We're in a formalised gym, my formalised gym is an enquiry, you tend to be going in at a commodity level price point.
Speaker Change: That's helping the conversation. And today, as we said, several times, world peace not up and running yet, but I don't think that's far away. We've had a bank relationship, this company bought.
Speaker Change: An ISO called Jet Pay Years ago, so the infrastructure was already here. It's not as though we're starting from scratch. And we already have, because it can act, we already have...
Speaker Change: A connection with World Bay. So I think that the effort is not as you would expect when I would have acquired something at Global or EVO. It took a long time. We already have a lot of the plumbing in place. [inaudible]
Speaker Change: I just had one in small, but on the enterprise side, Benny's team was a renewal or a new customer.
Renewal, Renewed An Enterprise Restaurant Relationship
Speaker Change: with all the components of what we've been talking about escalators.
Speaker Change: Payments which today's jet pay will be will pay after so the fact that we have all those capabilities they don't have to go to three or four different vendors
Speaker Change: and in some instances that's the case because I've had enough conversations to understand what people have been using in the past. The challenge NCR had historically is they were not a payments company, they were a software company and so today we have enough executives that do both.
Darren Wilson: that were credible to have conversations to offer and staring with saying a value added solution so that they have one relationship instead of many. [inaudible]
Speaker Change: No, that's very helpful, very comprehensive answers, so I appreciate it. And I guess one quick follow-up on that when you look at the retail opportunity and the restaurant opportunity and I appreciate that comment, so thank you for that. Where do you kind of envision a lot of hanging through and where do you think the bulk of the success will be if we look out maybe two to three years. Do you see this as being more retail and more restaurant and more of market QSR space heavy? I know you've had a lot of success in the market space already.
Speaker Change: Well, I have high expectations that restaurants are going to continue to get bigger and bigger as we've invested heavily in that. So I think
Speaker Change: Benny and the team, Miguel, the rest of them are going to grow the pie bigger, not just domestically, but internationally, and while we've had wins most of them then have been more service wins internationally on restaurant, and I'm expecting that's going to change especially with a low hot cloud coming to market. Yes.
But if you look at the pie...
Speaker Change: The vast majority, I'm just guessing 65, 70% of the volume runs through...
Speaker Change: Fuel, which is both commercial, includes commercial, and then grocery. And there's a lot of transactions running through our systems today running through connect, not as an supplier, but just switching transactions.
Speaker Change: Domestically, and that's the same footprint internationally. So I think it's going to orient to the retail side, but I have high hopes for Benian as team to get restaurants as well. Yeah, maybe to add to what you were seeing on the restaurant side. [inaudible]
Speaker Change: I know you asked specifically orientated towards payments and payments connect, which will be a big pillar of our growth, but there are three things that's making me really bullish about the future next few quarters, next few years.
Speaker Change: One of the S will continue to execute on our global services capability, which is a massive differentiator for us. We talked about some of the wins last quarter that we've had in an assignment that will continue.
Speaker Change: The second is the platform rollout that Nick Eilatini and his prepared comments is a massive differentiator for us You know when you look at customers like raising canes bring her we talk last time out existing customer is converting connecting the platform
Speaker Change: That is a lot of flexibility, growth, and innovation that restaurants are seeing value in the platform and products like Aloha Manu, products like SmartManager that we continue to roll out through the remainder of the year. We expect to see massive impact.
Speaker Change: The third one, which, you know, Jim mentioned the name Miguel, is the virtual market transformation.
Speaker Change: We've had about six to nine months vacant for our enterprise pet as I transform the sales organization one of the things that we've done is completely changed doesn't it shape?
Speaker Change: In Q1, Miguel started with the head of our enterprise sales, already having impact, complete e-restrictor sales. You know, about a year ago, you probably heard rumors that we heard, but for a while went to last.
Speaker Change: And now 12 months later, 12 months later, not only renew the relationship but we've expanded that relationship so we are seeing early successes and early wins that gives me a lot of confidence in the future.
Speaker Change: I see the exact same thing really on both sides. We have new leaders, almost in everyone of our markets below Darren.
Speaker Change: Other than Latin America, which has been doing terrific, but we have a new leader here in the US.
Speaker Change: We're hiring in the UK and we have new leadership in Japan on the retail side. So it's a new team. They're moving at a different pace.
Speaker Change: Maybe then in the past, you know, before it was a conglomerate, lots of different moving parts. Now we're a much slimmer company, very focused on getting the platform rolled out, getting the new products rolled out and growing the company.
Got it. Appreciate you taking the question.
Yes, thank you.
Speaker Change: We have reached the end of the question to answer session. I'd now like to turn a call back over to Jim Kelly for closing comments.
Jim Kelly: Thank you, operator, and thank you all for your continued interest in NCR Voyix. Have a good day.
Speaker Change: This includes today's conference, you may disconnect your lines at this time and we thank you for your participation.