Q2 2025 NCR Voyix Corp Earnings Call

Greetings and welcome to the NCR Voya second quarter 2025 earnings call. At this time. All participants are in a listen-only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference, please press *0 on your telephone keypad.

As a reminder, this conference is being recorded. I'd now like to turn the call over to your host. Sarah Jane, Schneider vice president of investor relations. Thank you. You may begin.

Good morning and thank you for joining our second quarter 2025 earnings conference call.

This morning, we issued our earnings release reporting financials for the quarter ended June 30, 2025. A copy of the earnings release and the presentation that we will reference during this call are available in the Investor Relations section of our website, which can be found at www.ncrb.org.

With me on the call today are James Kelly, our Chief Executive Officer, and Brian Webb, our Chief Financial Officer.

Retail and Nick yeast, our chief product officer.

This call is being recorded and the webcast is available on the investor relations section of our website.

Before we begin, please be advised that remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC.

We caution you not to place undue Reliance on these statements for looking statements. During this call speak only as of the date of this call and we undertake no obligation to update them.

In addition, we will be discussing or providing certain non-gaap Financial measures today.

Which we believe will provide additional Clarity regarding our ongoing performance.

For a full reconciliation of the non-gaap financial measures discussed in this call, to the most comparable gaap measure in accordance with SEC regulations. Please see our press release furnished as an exhibit to our form AK filed this morning and our supplemental materials available on the investor relations section of our website.

With that, I would now like to turn the call over to Jim. Jim

Thanks, Sarah, Jane and good morning everyone. I would like to welcome you all to our second quarter earnings call.

I will begin with a summary of our recent performance this quarter. We continue to execute on our key initiatives, winning new customers. In both our restaurant and retail segments. Signing existing customers to the voices Commerce platform, and getting additional interest in our latest Cloud products, and payment capabilities.

Our remain encouraged by the progress, we are making and our ability to improve future performance.

we will be launching additional vcp capabilities, beginning in the fourth quarter and continuing into next year in retail, we will be launching our Enterprise Grocery and convenience point of sale self-checkout and fuel at the NRF show in January

In restaurants, we'll be launching a new all-in-1 application for labor inventory, reporting and scheduling in the fourth quarter and our new centralized menu management solution in early 2026.

For payments, we completed our pilot for voices pay in the US in July and are on track to complete. The migration of our existing SMA portfolio and sign, new customers directly to the processing platform by mid September.

We are already an active discussions with our existing mid-market and Enterprise customers to offer acquiring Solutions not available on our Legacy jete platform.

we're also enabling acquiring in the UK, Canada and Latin America, AS Global Payments acquisition of world, pay provides us an even broader array of in-market capabilities,

Based on contract renewal dates, we have initiated conversations with about 10% of customers thus far regarding our expanded Services offering including payments.

Going forward, all new software contracts will be presented with our payment capabilities as the 2 Industries have become increasingly intertwined. This will reduce vendor management complexity and potential store downtime, while enhancing Revenue opportunities for the company.

Returning to Hardware. We continue to progress on the implementation of our odm agreement, which will commence by year end our pilot. For our European markets is already underway and has met expectations thus far at our Nashville facility. We are in the testing phase and expect the pilot for the Americas and asia-pacific to begin next month.

Since our call in May, there have been no material changes to the Tariff related cost to our business.

Which we continue to estimate to be between 8 million and 12 million for the year.

Given the ever evolving tariff situation. We are monitoring the potential impact to our business and will reassess our mitigation strategy to the extent circumstances change.

In the 6 months that I've been in my role at the company, I've had the pleasure of meeting with more than 50 of our customers gaining insights into our past performance and an understanding of their technology roadmaps.

We seem well aligned on both fronts and our customers are eager to transform their guests and staff experiences leveraging, the vcp Nick Benny, and Darren will now provide examples of our early success in implementing this go forward strategy.

I'll now turn the call over to Nick to discuss our product updates, Nick.

Thanks Jim. Good morning everyone.

We had nearly 78,000 sites connected to the Buick's Commerce platform, an increase of 16% year-over-year.

As a reminder, the vcp was originally developed to connect Legacy applications to the cloud and going forward, we will leverage its Cloud architecture and Edge, microservices to deliver our voic point of sale and voy self-checkout.

We continue to execute on our platform and related product initiatives, including the development and rollout of our Cloud Solutions. The continuous innovation of our microservices architecture and Edge services and the connection of our Legacy customers to the vcp.

I'd like to discuss 4 key examples that illustrate this progress and the positive outcomes that is driving for our customers and our business.

The first is consumer transaction, volume flowing through the vcp.

In the first half of 2025, volumes were more than 50% higher than the prior year, and the VCP processed more than 500 million transaction API calls in June alone.

This growth was driven by the increase in platform connected customers who benefit from greater real-time visibility into end-user purchasing Behavior. And the integration of these data flows into their business processes.

The second is the number of consumer orders running through the vcp.

This increased nearly 60% in the first half of 2025 compared to the prior year, with over 75 million orders processed, this June underlining, the platform's performance scalability and stability

The third highly Innovative example is our existing customers rapid adoption of pick list. Assist our AI enabled computer vision capability for self-checkout.

Available through the vcp big list of assists. Utilizes computer vision via cameras. Already built into most of our grocery, self checkout, scanners to identify, and present a short list of most likely items based on color weight and other characteristics.

This proprietary software technology can be used with both our Legacy and cloud-based checkouts to improve speed, accuracy, and efficiency, enhancing outcomes for both retailers, and their end customers.

We've already implemented picas to assist across more than 22,000 checkout, Lanes worldwide and continue to see strong Market interest in this feature.

The fourth is the increase in adoption of our Edge, virtualization solution, that enables our customers to operate their stores with the speed and efficiencies of running their digital channels.

This year we have continued to implement Edge for major retailers to improve store outcomes. For example, during the quarter 1 of our large Edge customers in Europe. Was able to address a business requirements to trial a new kiosk with a new hardware device and Implement a working solution in less than 2 weeks.

Edge. Not only significantly improved the speed to Market of such an application by months, but also enabled them to bypass a lengthy certification process.

Each of these examples like our other vcp Solutions contributes towards software ARR, growth from our platform sites, and are normally packaged as an add-on to a point of sale or self-checkout subscription.

1 of the biggest shifts. We see in the market, is the desire for Enterprise Brands to transform their stores to create, modern experiences for Shoppers and modern ease of it teams, that mirror their digital channels.

Cloud native Technologies, leveraging microservices whilst common in digital Commerce are less. So, in brick and mortar stores, we have been investing in this type of software architecture, for 5 years. And it is quickly, becoming a compelling competitive advantage.

With that, I will turn the call over to Benny to discuss our restaurant's performance.

Benny.

Thanks, Nick. In the second quarter, our restaurant, business signed, more than 200 new software and services customers. Our platform and payment sites, increase 4% and 1% respectively.

Software ARR, increased 4% and total ARR increased 3% in the quarter.

NCR Voice has long been a trusted partner for enterprise restaurants, and we continue to deepen our relationships and expand our product and service offerings in the space.

This year, we've made significant progress on our sales transformation efforts, including hiring a Miguel Solaris as the senior vice president and chief Revenue officer and other key sales leaders.

We are already seeing meaningful improvements in our customer satisfaction Global expansion and sales pipeline.

This quarter, we expanded our long-standing services relationship with a large Global coffee chain to provide enhanced drive-through support for their stores in the US and Canada.

This follows our recent International expansion with this customer as discussed on our Q3 called in November and we expect to continue to broaden our services contracts with them over time.

We also completed the services roll out for the large Global fast. Food chain. In the UK, we announced on our February call, which will deliver strong, recurring revenue for our business in the second half of the year.

Our services division and its ability to support Global brands with consistent high quality Solutions across geographies.

We are continuing to expand our enterprise restaurant offerings internationally, leveraging our existing global retail operations.

Given Latin America's High software adoption, at the point of sale, this region will be a focus as we drive the adoption of Aloha outside the US.

Our retail business today has strong market. Share in Mexico, chile, Peru, and Argentina. And we are positioned to build a similar presence with restaurants over time.

In addition to our Enterprise expansion efforts, we're also enhancing our commitment to small and mid-market restaurants through direct and third-party relationships.

Mid-market brands are increasingly looking for a scalable all-in-1 platform.

NCR Works delivers. A true store in a box experience. Combining point of sale payments and operational tools to simplify technology for franchises and accelerate. Same store growth.

Our world to World services are especially resonating with operators, who want enterprise-grade capabilities tailored to emerging brands.

For example, we recently renewed agreements with several mid-market restaurants in the Southeast, as they continue to leverage, our extensive service capabilities to grow and scale their businesses.

I will now turn the call over to Darren to discuss our retail performance.

Darren.

Thanks Benny. Good morning everyone in the second quarter, our retail business signed nearly 50 software and service customers.

Our platform and payment sites. Increase 25% and 13% respectively.

Software are increased 9% and total ARR increased 6% in the quarter.

As previously mentioned this quarter, we continued to introduce our vcp applications to new and existing customers.

for example, in Japan, we signed contracts with a National Grocery chain and a large drugstore chain for both Voz point of sale and self-checkout

Displacing, 2, separate competitors. With our leading Solutions,

In the UK, we signed a 5-year Voyage point of sale and self-checkout agreement with 1 of the fastest growing Supermarket chains in the market, and a long-standing customer of NCR voy.

In addition to point of sale and self-checkout, we will also provide hosting and loyalty solutions for their 1,000 store footprint.

further, this is a third market-leading grosser in the UK to adopt our latest Solutions

We have now signed agreements with more than 10 grocery Fuel and convenience customers across North America Europe and Japan to implement voic point of sale and self-checkout and other cloud-based Solutions. And cross entire store Estates.

Through the end of next year.

In Services, we signed a new multi-year agreement with 1 of the largest discount department store. Chains to install back office and point of sale Hardware across. Nearly 4,000 sites in the US and Canada.

We will look to expand our relationship with this customer over time.

Lastly, in our government business, we recently signed an expanded agreement with a large, long-standing customer to provide more than 14,000 point-of-sale terminals across their retail footprint.

With that, I will turn the call over to Brian.

Brian.

Thank you, Darren and good morning everyone for the quarter. We delivered revenue and adjusted ibida in line with expectations total revenue of 666 million declined, 8% due to continued softness and hardware sales recurring Revenue, increased 4% to 422 million. And as a percent of total revenue improved over 700 basis points to 63%.

Software ARR and total segment, ARR increased 7% and 5% respectively, platform sites, increase 16% to 78,000 sites and payment sites, increase, 3% to 8,400 sites.

Adjusted ibida of 95 million increased 20% in the second quarter as margin expanded 340 basis points to 14.3%. This was largely driven by our previously, discussed cost actions.

Driven by our efficiency initiatives and our software and services sales mix.

Turning to retail recurring Revenue increased 5% to 277 million driven primarily by the ramp of a new large customer agreement and platform. Revenue growth total, segment Revenue declined 12% to 454 million due to the previously, mentioned decline in Hardware Sales,

Segment adjusted ibida decreased 7% to 81 million primarily due to the declines in Harbor Revenue. But absolutely, but it improves sequentially from the first quarter adjusted ibida, margin of 17.8%, expanded 100 basis points year-over-year,

In other expenses, decreased 23% to $54 million, which reflects the previously discussed cost initiatives.

Adjusted free cash flow was 37 million for the quarter before considering 24 million of restructuring, cash expenditures, 284 million of cash, taxes related to the sale of digital Banking and 5 million of accelerated product Investments. We invested 42 million in capital expenditures during the quarter and 81 million for the first half of 2025. Over. 80% of capex was related to software Investments. Our net leverage position was 1.9 times at the end of the second quarter, based on our net debt as of June 30th and the midpoint of our full year, adjusted ibida Outlook.

Turning to our Outlook, we continue to expect Revenue to range from 2. 5, 7 5.

With that, I'll turn the call back over to Jim for closing remarks. Jim.

in closing, I'm pleased with the commitment of progress. The team has demonstrated the first half of the year, more importantly, with the benefit of being in my new role for almost 6 months, I'm increasingly convinced that NCR voyages can advance the foundational strengths I've outlined on my first call in February.

Our competitive positioning remains strong, and this is despite some past deficiencies and consistently demonstrating urgency and execution to some of our valued customers, I believe our Collective efforts over the past. 6 months are beginning to change perception in a positive way, which is reflected in our recent success in the market, and our improving ARR performance.

I'm encouraged by the cultural shift together with our ongoing product Innovation efforts, increased focus on our global Service offering enhanced payment strategy, and our ability to continue. These efforts to deliver value for our customers and our shareholders. I'll now turn the call over to the operator to begin the question and answer section.

Operator.

Thank you. If you'd like to ask a question. Please. Press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

You may press star 2. If you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

To allow for as many questions as possible. We ask that you each keep to 1 question and 1 follow-up. Thank you.

Our first question comes from the line of Dan planned with RBC Capital markets. Please proceed with your question.

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

Uh, good morning. Thanks Dan, excuse me. Um, I would say uh, we have not seen any pullback from customers. As I mentioned, in my prepared comments, I've met with now over 50 of our

um,

For all the reasons that, you know, we've we've outlined in the past but maybe Darren you want to add anything to it? Yeah, sure. Hi. Don on, on the retail side, as, uh, I had it my prepared remarks. We signed nearly 50 customers and we saw a good spread, um, of demand across kind of the 4 key, tenants of the retail proposition being Hardware software, services and payments.

Uh so it's a good spread across the product portfolio. Uh so um

Well, which is again our value proposition. So, in fact, as a result of some of the economic conditions we are seeing, AIC of interest. Yeah, Dan, I would like to make one last point to this.

Where the company has historically supported, its existing customer base, dating back to the acquisition. So the software applications, they bought what we're focusing. The sales organization on is, is expanding into new, logos, new relationships. And some of what Darren mentioned earlier, represent, new logos, not where Benny would see it. More often in the SME space. Uh, we're starting to see it because of the applications that we have in the market. I mentioned in

Uh I guess it was the first earnings call that I was on which was year end call that were moving away from selling the uh Legacy applications in favor of our next gen Voyage. Pause and Voyage self check out so we're seeing it. Not just, uh,

With the existing base interested in upgrading, but we're definitely seeing new entrants to the base.

That's great, that's a great color. Um, just a quick follow-up on the free cash flow, um, completely better in the current quarter, the than what we saw in the, in the first quarter. Um, still there's a pretty material ramp that's required to get you to the 17119 guidance. You know, also understanding your second half Trend, uh, Trends tend to be more strong for free cash flow. But I'm just wondering, are there any kind of key components that we

Should be mindful of and then kind of level of visibility uh that you have going into the the second half on the Free Cash Flow side. Thank you.

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

Okay, thank you very much.

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

Hey, good morning. This is Isaac Salas in the upper Ian. Thanks very much for taking the question. I just had 1 on restaurant. Steve, but even the margin, um, could you help us better? Understand what drove the strength in the quarter? It sounds like that's primarily on on the growth of software and power mix, um, as well as some cost initiatives. Uh, maybe just any kind of color you can give on that. And then, you know, expectations for Segment margins as you progress through the year. Thank you.

Yep. So it's a you know, good software and services growth and recurring Revenue growth in restaurants. Um is is helping margin payments growth, um, software platform growth. And um, you know, restaurants has had a good consistent margin, you know, this year last year and we expect that to continue. We we see restaurants finishing the year about 32%, which implies, you know, pretty consistent from what we saw in the first half. Um, on the retail side, we expect Improvement in margin in the second half from what we saw in the first half, that's where we've had, um, Hardware margin pressure. Um, that did improve, um, quarter over quarter, 21 to Q2 and we expect to see that, uh, continued Improvement as we get in the second half, um, with Revenue ramping and, and our cost actions that we're taking

And, and Retail should be at about, um, 18 to 19% for the full year. I would amplify on the payment side, clearly. Uh, the restaurant organization, which has been involved with payments for the last, I don't know, 4 or 5 years. Whenever jet pay was initially acquired. Now with uh the world pay when it's excuse me. Uh processing capability will be able to sell point of sale on the re on the retail side. So I we would expect going into next year uh increasing lift uh there as well, on a margin basis for from payments.

Okay, that's very helpful. Thank you. And then just as a quick follow-up, um, on the, the Tariff exposure, I believe, the 8 to 12 million range is the same as last quarter, so maybe any additional details? Uh, you can provide on any kind of mitigating actions that you're taking either through pricing or their sources. I didn't, maybe have a conversation.

Or so tweets that came out relative to tariffs. I read the articles this morning, you know there's more news out there you know for now we feel comfortable in the range that we just outlined. Uh but I also mentioned uh in my prepared comments, you know. Initially when this started uh my initial, my expectation was this was somewhat transitory, it was not going to persist but just watching the news reading what's out there? My sense is this is not going to end sometime soon, so I think we're going to have a different conversation in the back half of the year with our customers that uh, either by our services or buy Hardware from us directly, uh, because, um, you know, at some point this is going to be if this is permanent. Then it's going to need to be uh, more of a shared expense as opposed to our expense.

Okay, understood. Thank you.

Yeah.

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

Uh Hey guys uh thank you for taking the question. Uh you mentioned in response to a prior question, some of the cost savings initiatives in the back half of the year. I was wondering if you could just uh update us on the the various initiatives that you have planned in place uh, for this year and anything uh, until next year and just kind of remind us, you know, where we are, uh, and you

Those processes.

Thank you. Sure. Sure. Well um so if, if I think about our cost program for this year, we sized it at 100 million 2/3 is around. Vendor spend 1/3 around our own labor and and those that program is largely executed or or being executed about 40% of the savings hit in the first half and about 60% will hit in the second half and then we're starting to plan for next year and it's a little premature to talk about next year, but we'll talk about that in the the next uh, you know, quarter or 2.

Got it, appreciate that. And then I was wondering if you could talk about the Buffalo Wild Wings renewal um you know was that a competitive process? How do the RFP go if so and uh, what do you think was kind of the Tipping Point to uh, uh, to get to renewal on that, on, on, on that contract, specifically, thank you.

Yep, I'm going to have Betty do that but I mean we'll be some limited on specifics. Um, you know, we don't generally comment specifically on a customer per se but I think we can give you some color on this.

Yeah.

I would highlight 3 things that's also showing up in all of our business today. I, I think, 3 things happened 1 is uh, the transformation of the team, the sales team, and the leadership that we've brought in as improved our relationship. How we show up, how we engage? Yes, that was an RFP engagement. Um, the second thing is, uh, our investment in our product, we've talked about some of the solutions and capabilities that we've brought

On and we continue to to bring. So this is not just about what we bought on over the past 12 months, but it's also how we're investing in our strategy for the next 24 months key capabilities. That, uh, you know, they are looking to to leverage. Um, and then the third thing is, um, I would say this is a very deep relationship, uh, very similar to most of the relationship. We have across the base, uh, and, and that means it's not just 1 facet, it's multifaceted. Uh, so I wouldn't attribute it to just 1 thing, but all these, you know, multi-year, um, relationships that we have, you know, continue to, uh, to drive the momentum.

Yeah, I'm I'm going to add some color to it as well not directly involved with this, although have a relationship with the company. Um, if you look at what NCR has gone through over the last several years, between the split the, the vest that we did last year and there's a lot of uh change that has gone on in the in the company. And as a, you know, before the sweat. This was a very large organization with a lot of moving parts and a lot of mouths to feed, you know, today we are singly focused on software and I think that is resonated last year and in particular, in the last 6 months with our customers. Uh, as you said, as I said, I've seen 50 customers myself. But every 1 of the executives have been on the road, uh, extensively beyond the account Executives and the people in the field. Um, they're starting to see Executives, probably some of them for the first time in a long time. So there,

For a very long period of time, change is very hard at the point of sale.

We have what we believe the leading applications uh in the market especially what Nick is outlined with our next Generation Solutions. So I think it's very uh, I think you should expect as we've said in the past and it continued into this quarter, our attrition rate Revenue, attrition rate is still at 1%. So customers are staying um because they like working with they believe in the company and we're committed to their success.

That's great, appreciate all the caller and uh obviously great to see so uh congrats to the team. Thanks for taking the questions. Thank you. Thanks.

Thank you. Our next question comes from the line of Cardiff ma with North Coast research. Please proceed with your question.

Hey, good morning, Jim. Uh, seems like you're starting to have success with the payment business and I'm wondering, you know, how do you envision that business progressing over the next 12 to 18 months?

Uh, good question kartik, thank you. Um, look I I mean as you, well know I've been doing that for a very most of my career. Um, you know, we are learning, um, you know, the capabilities of the company, both from a point of sale now, with World pay, but our own internal capabilities with voix pay our works, connect our internal Gateway,

uh, capabilities, I think in the past, uh,

Ncr's view was they were not in a payments space. I mean until they bought jetpay. And even then jetpay was just too small of a, um, an application or a processor to be able to handle the size of these customers.

So my impression is that customers just like we see in Restaurant, They're going to want especially new customers 1 relationship to provide all the services that we offer and payments is obviously critical. The point of sale is the most critical but it's only as good as the payments that continued. I've seen a number of examples where there's a variety of intermediaries between us and the actual processor. And what we're looking to do is streamline it. So thus far we've had very good success with the uh, mid-market on the um,

On the retail side. Uh, we are beginning to engage with the larger customers. Again, this is domestically, um, for both retail, and restaurant and customers, especially restaurants in the past, again, given the size of the jetpay, uh, jetpay is capabilities or its processing capabilities. Um, I think larger restaurants were concerned to do business, uh, with with that application. But that doesn't, that doesn't exist with worldpay. So, I think Benny has been, uh, very active as as Miguel and the rest of his team engaging.

Being in conversation. So I think we'll start to see again. We're not on that system until I guess the fourth quarter, um, end of the third quarter, beginning of the fourth quarter. So I would see it ramping into next year. It's not going to happen overnight. It's not as though we bought a portfolio and it just lights up like days of the past and payments. But these are long-term relationships. They trust us and now we have capabilities that we've never had before and so we're going to make those available. Um, beginning in the fourth quarter on the payment side, we've already begun aggressively on the Gateway side to be able to displace competitors, that have some way somehow over the years found their way in

I talked to a little bit of color cic, um, as Jim said domestically, uh, strong and have the full end to end proposition here in the US. Uh, we're in a good position on the Gateway across multiple International markets. Uh, and we're actively, uh, standing up the pay capability, uh, in the Mia, which is our second biggest retail market. So, uh, that will follow through to next year 1 more Point. That's what Darren just mentioned. That maybe think of it, you know, with the Global Payments acquisition of world pay. Um,

My former company Global Payments as well as Evo embedded in that organization gives us, uh, greater reach, especially across Europe into Asia, Asia Pacific and into, uh, South America. So, the combination of those 2 companies leaders in their space, uh, makes it even more attractive for us to be able to form a relationship, uh, with our, uh, with our customers to provide services in more markets than we would have been able to, with just World pay previously.

Thanks Jim be just 1, question Benny on the restaurant side. You know there's been a seems like competition is increasing on that side, at least over the last 6 months and I'm wondering if you're witnessing that um, the competition increasing or if you think it's been about the same, just your perspective on how the market is right now.

Hey, thanks, Carter. Um, I I look, I think the restaurant space has been Innovative especially, uh, post post, uh, the pandemic. We've seen a lot of, you know, startups, smaller players entering the market. Um, I wouldn't say the past 6 months has been any, any difference since, uh, I have arrived, I think what, what gives me a lot of confidence is, you know, the few things that Jim and I discussed when we talked about Buffalo wide wings, which is I think out of out in fetched position, uh, our customer sentiment towards the transformation. And and then they're showing up the new culture, the investment, and the focus. So, um, I wouldn't specially call out any anything different over the past 6 months.

Yeah, 1 other point of this, uh, I think in particular in the restaurant side because I think we get compared against others who are public or not companies is, uh, and you ever works is predominantly an Enterprise, uh, company. If you look at the relationships, the brands that we support, these are Enterprise organizations the SME Market on restaurant. Really is born out of the Aloha acquisition. Um, so yes, we continue to support that market.

It's an important market for us but ultimately where the company plays um is at an Enterprise midmark upper mid-market and Enterprise level. And I think on that uh score we are seeing less of the competition maybe than what you're thinking of.

Yeah.

Thanks.

Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad,

Our next question comes from line of Parker Lane with stifel, please proceed with your question.

Yep. Good morning everyone. This is Jack McShane on for Parker. Thanks for taking the questions. Uh, I'm curious. Yeah, good morning. Uh, so the team once provided kegger expectations,

Um, through 2027 that showed uh restaurant outpacing, retail growth by a point or 2. Uh, this is proved out from a revenue perspective, but the opposite seems to be true for ARR.

Can you provide a little more color here? You know, would you expect this trend to shift? And maybe it's just the simple factor of quicker retail adoption of platform. But yeah, a little more color here would be helpful.

Yeah, I I would, I would suggest and I as Benny put in his comments, you know, during the spin and shortly there after the spin, you know, there was a lot of dislocation at the executive level, uh, in particular, um, on the, on the restaurant side more, so than the retail side, there's a number of Dynamics here that cause that to occur. And so we only just recently re, uh, re-established, the entire leadership team, uh, underneath Benny, um, in the last, uh, in this first quarter of this year, or first half of this year, uh, so I think trends that maybe were discussed several years ago or actually wasn't here. So, I don't know exactly when that would have occurred. I, I think those Trends will, uh, will change, uh, fairly rapidly over the next, uh, 6 to 12 months and probably be more in line with the expectations previously. But again, the disruption of going through a split of which I've seen that firsthand in another company now, that's, that is a

Big change for the organization. It was a change for the better, as I said earlier. Um, but I think on the retail side, which represents the a significantly larger piece of business because it's more Global, uh, that organization largely stayed intact. Now, we've made a number of changes since I've joined, uh, almost in each of the regions. Um, but we have a very strong core group of people across the markets and the newest, uh, product to Market or on our

Boy side down the platform side that has been um promoted pretty significantly over the last 12 months, not the same. Um, on the on the restaurant side, not at least at this point in time.

You want anything?

Got it.

Okay.

Inside.

Pay partnership.

Yeah, I think as I said last, I don't know that I'm going to give a long-term forecast on it, but I think it'll be significantly bigger than that number because you're talking about.

You know, we have probably 450 very large customers that. Uh, today don't uh, take payments today. What you're seeing in payments is is exclusively almost exclusively SME and more on the smaller side than even the midsize. And that's almost exclusively on the restaurant side more. So than the restaurant the retail side plus we have, you know, we look at ourselves as 4 regions, Latin America, US Canada, Europe, Asia and then Japan. And other than the us, we're really not promoting payments in any other way, so I think you'll see significant growth growth, uh, timing. We expect to begin to see and be able to show you in the first half of next year. But, you know, at this point, everything is very positive. The conversations. We've had the wins. We've already had, uh, with uh, with customers both on Gateway and payments. I think we'll continue in the best evidence is on the restaurant side. All

New customers that come in through our SME organization, you know, it's almost 100%.

So it will look uh exactly. Like we outlined I think in all the other ones it'll take a little longer because they have existing relationships. These are bigger organizations, but in the end we're offering them 1 relationship as opposed to dealing with a multitude of relationships and while that may sound so much trivial, when there's a problem, when you can't get to your system to work because of a, a disconnect between the point of sale and the processor, then I can assure you. Lots of phones, start to ring very aggressively. So having 1 relationship, all the way to the end is absolutely a selling feature. It's not something unique to us. There's plenty, there's plenty other software companies that have been doing this for a number of years. It's just not something that NCR embraced years ago and we're embracing it now. So I have high expectations that payments are going to be a meaningful part of our Revenue going forward.

Yep.

Thank you.

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

Hi, thanks for taking the question. So lots of good new customers signings here within restaurant and retail. I was wondering if you could size the amount of our and backlog for implementation or the change in backlog, just any color here. As we think about the Ford uh, software Revenue growth here.

Yeah, I'll start this. If you look at a trend, I don't have the piece of paper in front of me, not a second. If you look at our trend from last year,

Uh, to where we are now. Actually, this goes back to 23. I think ARR, uh, software ARR was something around 700, it's approaching 800 today. Uh, so it is definit moving in a very positive direction and that story in a period of a spin of sales of businesses. I mean, there's just a lot of clutter in that I can't overemphasize how different an organization. Even from the time that I was the chairman to where now I'm the CEO that, um, the the the focus has only enhanced because of all the good work that was done, last year to fix the balance sheet, and deal with some other structural issues. You know, it's much more focused now on getting the new products out, that's what's planning for NRF, that's what Nick has been working on together with our CIO Johnson. Um, so I I would expect he'll continue to see that grow. And as as we actually bring on these uh, you know, as launched the uh boy's Paws into the marketplace.

I think you'll see somewhat explosive growth uh on those numbers.

And from uh, Alex from the on the retail side, you've seen the mix shift in terms of what's been happening on on the hardware Trends and per my prepared remarks of, you know, 50 customers were predominantly software and services. Uh, with the, the corresponding growth in, uh, platform and payment sites. So kind of the mix shift is is trending to recurring. So pay your our comment, I think you'll see the uh, Tailwind follow that rather than the the typical 1-time Hardware.

Benny.

And it's not just POS but it's also the POS and some of the add-on functionalities like loyalty, um, like the smart manager for for the POS. So your back office etc. Those are driving the ad or I left that we're seeing and we're excited about it.

Awesome. Thank you.

Thank you.

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

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

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