NCR Voyix Corp Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Competitive Positioning: NCR Voyix is number one in self-checkout and point-of-sale software for convenience, fuel, grocery, and restaurants. Strong revenue retention of 98% over 3 years.
• Platform: Invested in platform over 5 years. Has ~74,000 sites on the platform (up 26% YoY) with over 110 billion API calls in 2024. Plans to launch enterprise platform solutions in 2025. In restaurants, Aloha Cloud point-of-sale has ~15,000 locations. In retail, new self-checkout solutions rolled out in 2024 with global rollout expected by year-end.
• Service: Leverages 8,000 highly trained professionals for software management, store implementation, and hardware maintenance. Bundling services and software into multiyear subscriptions.
• Payments Opportunity: Entered a 5-year non-exclusive agreement with Worldpay to provide payment functionality for enterprise customers in the US, with rollout to other markets planned.
• Hardware ODM Transition: Ennoconn is working on transitioning, expecting to continue recognizing hardware revenue through most of 2025. Exiting certain one-time software licenses and services totaling $60M in 2024 to increase recurring revenue composition.

Segment Performance

• Restaurants: In Q4, signed over 200 new software and services customers, converted over 135 existing customers to the platform. Platform and payment sites increased 6% and 8% respectively. Software ARR grew 3% and total ARR grew 4%. Won a multiyear platform and payments contract with Yogurtland, converted Brinker International, and signed an $80 million end-to-end services contract with a global fast food chain in the UK and Ireland. Payments attach rate remained strong.
• Retail: Signed over 35 customers, adding nearly 700 sites. Platform sites increased 46%, software ARR grew 5%, and total ARR grew 6%. Renewed and expanded agreements with grocery chains in Europe and the UK, signed a new 5-year contract with a Japanese grocery chain, and renewed and expanded a $335 million government relationship with the Defense Commissary Agency.

Guidance

• Revenue guidance: Currency-neutral revenue ranges from $2.575 billion to $2.65 billion, reflecting a 9%-6% decline due to hardware weakness. Core software and services expected low single-digit growth in 2025 when adjusting for terminated agreements and one-time items.
• ARR and platform sites: Expected mid to high single-digit growth in 2025.
• Adjusted EBITDA: Ranges from $420 million to $445 million, an increase of 21%-28%. Adjusted EBITDA margin ranges from 16.3% to 16.8%.
• Non-GAAP diluted EPS: Between $0.75 and $0.80.
• Adjusted free cash flow unrestricted: Between $170 million and $190 million.
• Q1 2025: Revenue expected to decline in the mid-teens due to a significant hardware refresh from a large retail customer; adjusted EBITDA expected to show high-teens growth vs Q1 2024.

Risks

• ODM Transition Delay: Disruption in transitioning to Ennoconn for hardware, causing delays in recognizing hardware revenue as initially expected.
• Tariffs: Uncertainty regarding timing and impact of pending tariffs, with the company stating it will address any impact if and when tariffs occur.

Question and Answer

• Q: Kartik Mehta on the payments agreement timing: A: Jim Kelly said payments would be live by end of summer at latest, starting with migrating some accounts and then selling to new retail customers domestically, with rollout to Latin America and Europe planned.
• Q: Will Nance on software services outlook and hardware: A: Jim Kelly and Brian Webb-Walsh discussed exiting one-time licensing, hardware revenue guidance, and timing issues with hardware refreshes causing tough comps in Q1 2025.
• Q: Charles Nabhan on government contract: A: Jim Kelly and Brian Webb-Walsh provided details on the $335 million government contract, incremental revenue, and cost efficiency initiatives.
• Q: Ian Zaffino on retail environment growth: A: Benny Tadele and Jim Kelly discussed active conversations in retail, focus on next-gen solutions and services, and buoyant outlook despite hardware challenges.
• Q: Dan Perlin on strategic priorities acceleration: A: Jim Kelly talked about aligning payments and software, partnership with Worldpay, and focus on growth and customer acquisition.
• Q: Matt Summerville on ODM transition and retail disintermediation: A: Jim Kelly and Darren Wilson discussed ODM transition delays, customer focus, and retail disintermediation trends and impacts.
• Q: Erik Woodring on tariffs and monetization: A: Jim Kelly and Brian Webb-Walsh addressed tariff uncertainty, monetization path, and revenue relationship with large transaction volumes