NCR Atleos Corporation Q4 FY2024 earnings call

• 2024 was a successful year with over $4.3B in revenue, $3.22 adjusted EPS, and $242M free cash flow.
• Service levels improved significantly, and Atleos was awarded the ATMIA Outstanding Service Award in February 2025.
• 2025 goals:
  • Grow efficiently by judiciously allocating growth capital and operating expense.
  • Develop a service first culture, as service is a key differentiator with higher margins.
  • Embrace simplicity to streamline operations and improve customer experience.

Self-Service Banking

• Full year 2024: Revenue grew mid-single digits, services and software were primary growth drivers with 9% growth in recurring revenue. ATM as a service contributed 1% to top line growth. Profitability was boosted by $100M in gross savings, with margin expanding 400 basis points from Q1 to Q4.
• Q4 2024: Revenue grew 8% to $718M. Adjusted EBITDA was $181M, margin over 25%. Recurring revenue mix was 60%, up ~200 basis points YoY. ARR was up 10% YoY. Bank Outsourcing Solutions revenue grew 24% YoY to $52M in Q4, customer count up 50%, ARR over $212M, ARPU $8,600.

Network segment

• 2024: Core ATM Network revenue grew ~4%. Q4 revenue $317M (-2% YoY). Withdrawal volumes up 6% in NA, deposit transactions up 240% YoY in Q4, ReadyCode volumes up 50% QoQ. Adjusted EBITDA $114M, margin 36%. Unit count slightly down due to pharmacy store closures, but expecting to add 3-4k units in 2025.

• 2025 core revenues (excluding Voyix) expected to grow 3-6% constant currency. Total company revenue expected to grow 1-3% constant currency. Adjusted EBITDA expected to grow 7-10% constant currency.
• EPS expected to grow 21-27% to $3.9-$4.1. Free cash flow expected to be between $260M-$300M.
• Q1 2025: Core revenues flat, total revenue down mid-single digits, adjusted EBITDA $165M-$175M, EPS $0.5-$0.6, free cash flow modestly negative in Q1 due to working capital.

• Limited exposure to Mexico tariffs, with plans to build inventory to reduce exposure.
• Monitoring global geopolitical and trade relations for potential tariff impacts.
• Seasonality affecting gross profit margins, with regular seasonal patterns in hardware and network business.

Q: Can you talk about the ARPU in the as a service backlog and the trend?

A: Tim Oliver mentioned that the average ARPU in the backlog shifted due to geographic distribution, with some high-margin machines in backlog and a mix shift toward lower-margin regions. But across the year, the average ARPU of inducted units will be accretive to the current $8,600 per device.

Q: How long will the rationalization process for low performing stores in the network business continue?

A: Tim Oliver stated that they don't know exactly how long the rationalization will continue, but when stores close, underperforming machines are moved elsewhere, and they expect to sign deals in 2025 to add 3,000-4,000 units to the count.

Q: What's being stripped out of the EBITDA calculation?

A: Andy Wamser explained that they are excluding other income and expense going forward to remove volatility, with the order of magnitude being $5M-$10M per quarter.

Q: How are you thinking about capital allocation and share buybacks?

A: Tim Oliver mentioned that they aim to get to 3x net leverage, and once there, they will debate cash return to shareholders, including share repurchases if the stock is undervalued.