NCR Voyix Corporation Q3 FY2025 earnings call

• Strategic shift: The company is repositioning as a software - led business, with the outsourcing of hardware business on a revised schedule, starting with Ennoconn in January. - Modernizing legacy structures: Introducing price escalators in software and services contracts upon renewal to align with value delivered. - Innovation on Voyix Commerce platform: Accelerating innovation with AI - enabled development, having deep domain experience and over 50 proprietary applications, and showcasing new solutions at industry shows like NACS with positive feedback. - Business segment performances: Restaurants signed over 200 new software and services customers, platform and payment sites increased, and made progress in payments. Retail signed over 30 new software and services customers, expanded fuel offering, launched new loyalty solution, and expanded services relationship.

For the quarter, total revenue was $684 million, down 3% due to lower hardware sales and one - time software and services revenue. Recurring revenue increased 5% to $425 million, driven by 7% growth in restaurants and 4% growth in retail. Restaurants: Total segment revenue was $210 million, flat. Recurring revenue increased 7% to $146 million. Segment adjusted EBITDA increased 12% to $74 million, with margin expanding nearly 400 basis points to 35.2%. Retail: Total segment revenue declined 4% to $467 million. Recurring revenue increased 4% to $276 million. Segment adjusted EBITDA declined 17% to $90 million, with adjusted EBITDA margin decreasing 290 basis points year - over - year to 19.3% but increasing 150 basis points sequentially. Platform sites increased 12% to $78,000 and payment sites increased 3% to nearly 8,500.

• Revenue: Expected to be between $2.65 billion and $2.67 billion, with hardware revenue above prior expectations and software and services revenue slightly below. - Adjusted EBITDA: Expected to range between $420 million and $435 million. - Non - GAAP diluted EPS: Expected to be between $0.85 and $0.90. - Adjusted free cash flow: Expected to be between $170 million and $175 million (excluding restructuring and transformation costs and accelerated product investments). - CapEx: Full - year CapEx expected to be approximately $160 million, inclusive of accelerated product investments. - Restructuring cash outflows: Transformation restructuring cash outflows for 2025 expected to be approximately $100 million.

• Forward - looking statements: Subject to risks, uncertainties and other factors that could cause actual results to differ materially from forward - looking statements. - Hardware outsourcing: ODM implementation has transition risks such as integrating with Ennoconn and preparing customer support processes. - Pricing adjustments: Market acceptance risks for price escalators in contract renewals. - Competition: Competition in the payments and software markets may impact business growth.

Q: Can we talk about the price escalators you've referenced, the magnitude we should be sort of expecting, how much revenue is ultimately impacted by that and would be set a benefit from what you're doing there? And maybe more importantly, can you talk about how this maybe differs from Voyix's historical practice?

A: James Kelly said the company historically had not had escalators in all agreements, some had but unclear if billed accordingly. Now getting back to ensure agreements have escalators and charging accordingly. Escalators are not extreme, more cost of living plus, relatively small so far but seeing revenue and earnings increases.

Q: Can you talk about the payment side of the business. I would think these new relationships on fuel and convenience have to be more needle - moving in nature. Is there a way for you to somehow quantify or directionally quantify what that maybe adds to the payment side of the business, and maybe when we can expect to get a little bit more granular financial detail on the payments performance?

A: James Kelly said it's early days. U.S. has large payment volume opportunities on Voyix Connect platform, like $800 billion in consumer card volume and $600 billion in fuel payment gateway volume. But it will take time to see full impact, and preference is to launch with next - gen products.

Q: Jim, you mentioned the ODM phasing project is going to kick off in January. Just wondering if you can give an update on how long you expect that to take place and what the phasing of that project actually looks like?

A: James Kelly said they had earlier expectations but technology challenges led to revised schedule. Intending to start first week or second week of January, start moving in pieces, expect 90 days, by beginning of second quarter to be on net accounting basis.

Q: In your conversation and your salespeople's conversations with your customers, I was wondering if there's any insights they're sharing on the health of the consumer. And how that's informing their willingness to spend into '26? And I guess more importantly, as a backdrop, what sort of cyclicality have you historically seen around technology investments in response to consumer sentiment there?

A: Darren Wilson said conversations with customers show steady consumer health, no massive revolution in growth potential. Nick East said no conversations grounded in lack of consumer confidence, instead customers are hungrier to compete for consumer business through technology investments. Beimnet Tadele said in restaurants, conversations are about leveraging technology for revenue acceleration, efficiency, etc., with healthy pipelines.