DIEBOLD NIXDORF, Inc Q4 FY2025 earnings call

Management Statement and Operational Highlights

• 2025 Performance: 2025 marked a defining year where Diebold Nixdorf strengthened its foundation, delivered adjusted EBITDA of $485,000,000, and more than doubled free cash flow to $239,000,000. Core businesses were strong, and growth initiatives in banking and retail were gaining traction.
• Banking Initiatives: The company's role expanded beyond the ATM, with branch automation solutions gaining momentum through large multiyear wins, and the DN Series portfolio expanded with the introduction of the DN Series 300 and 350.
• Retail Momentum: Retail in North America saw three consecutive quarters of revenue growth, secured new logos, and the SmartVision AI solution generated strong customer interest.
• Services: Focused on being the most trusted service provider, optimizing service centers globally, achieving best SLA performance of the year, and rolling out enhanced field service technician software.
• Lean Methodology: Systematically lowered cost base, improved working capital, with inventory reduction via a dynamic Kanban system spanning over 400 high-use items, and standardized order processing in shared services across 11 countries.

Segment Performance

• Banking: In Q4 2025, banking product revenue grew 20% year over year driven by strong ATM recycler adoption. Full-year banking revenue was up 1.2%. Banking gross margin expanded 410 basis points year over year in Q4 and 160 basis points for the full year.
• Retail: Q4 2025 retail revenue increased 12% year over year to over $300,000,000, with 3 consecutive quarters of revenue growth. Full-year retail revenue grew 2.1%. Retail product revenue grew 16% year over year in Q4, and full-year retail product revenue increased 5.4%. Retail service revenue in Q4 grew 8% year over year, but full-year was comparable to prior year due to service disruptions. Retail gross margin expanded 80 basis points year over year in Q4 but declined 20 basis points for the full year.

Guidance

• Revenue: 2026 guidance range for revenue is $3.86 to $3.94 billion, with quarterly cadence consistent with 2025.
• Adjusted EBITDA: Projected range of $510,000,000 to $535,000,000, representing approximately 8% growth at the midpoint.
• Free Cash Flow: Forecasted in the range of $255,000,000 to $270,000,000, roughly 10% growth at the midpoint, with positive free cash flow expected in every quarter.
• Adjusted EPS: Expect adjusted EPS to be in the range of $5.25 to $5.75 for 2026, assuming an effective tax rate of 35% to 40%.

Risks

• No specific detailed risks discussed, but general risks associated with business operations, market conditions, and competition are implied.

Question and Answer

Q: First half, second half cadence and Q1 outlook A: Revenue cadence is approximately 45% in the first half and 55% in the second half, similar to 2025. Q1 adjusted EBITDA margins are very comparable to 2025 albeit on higher revenue. Service investments will continue in Q1, with sequential year-over-year improvement expected from Q2 as scale increases.

Q: Retail logo wins in U.S.

A: There were nine new logos across grocery, pharmacy, and QSR segments. AI and modularity played key roles. U.S. retail is expected to grow double digits in the foreseeable future.

Q: Days sales, days inventory improvement and remaining potential A: Days sales outstanding (DSO) was down 4 days to 50, and days inventory outstanding (DIO) was down 7 days. Expect further improvement, with opportunities for 4-5 days DSO and multiple days DIO as Lean initiatives continue.

Q: Capital allocation, share repurchases and tuck-ins A: Share repurchases are the priority as the stock is viewed as undervalued, with flexibility for small strategic tuck-in acquisitions, focusing on service opportunities.

Q: ATM demand by region A: Strong in North America, Latin America is recovering, positive in Europe and Asia Pacific, with expansion into the branch ecosystem being a key differentiator.

Q: Banking recycler mix growth opportunity A: Continued growth in recycler mix is expected as penetration improves, with Lean methodology to maintain margins.

Q: EPS guidance drivers A: Continuation of the share buyback program and post-tax operating profit drive EPS, with adjusted EBITDA growth leveraging the operating model.