NCR Voyix Corp(VYX) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $708 million, a decline of 11% primarily due to lower hardware and related install services [13][36] - Normalized adjusted EBITDA for the quarter was$ 101 million, reflecting cost actions taken in the previous quarter [14][38] - Free cash flow for the quarter was a use of $25 million, impacted by approximately$ 80 million in fees related to the digital banking transaction [45] Business Line Data and Key Metrics Changes - In the Restaurant segment, total revenue was $211 million, a decline of 7% on a normalized basis, with adjusted EBITDA increasing by 27% [40] - In the Retail segment, total revenue declined 12% on a normalized basis, driven by a 28% decline in hardware sales [42] - Software ARR and Total segment ARR increased by 2% in the Retail segment and remained flat in the Restaurant segment [20][15] Market Data and Key Metrics Changes - The company had approximately 70,000 sites on its cloud-native commerce platform, an increase of 25% from the prior year [14] - The payments attach rate in the mid-market business remained strong at 97% for new customers [19] Company Strategy and Development Direction - The company is focusing on expanding its international presence in restaurants and retail, with a new Executive Vice President appointed to lead these efforts [8] - A restructuring of the sales teams and a revised incentive compensation plan are being implemented to drive new customer growth and expand market share [28][34] - The company plans to invest a portion of the digital banking proceeds into enhancing its solution sets for restaurants and retail [29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's strategic initiatives and the potential for growth in 2025 and beyond [111] - The company is maintaining its 2024 revenue and EBITDA guidance, expecting revenue between$ 2.805 billion and $2.860 billion [47] Other Important Information - The company completed the sale of its digital banking business, receiving$ 2.45 billion in gross proceeds, which significantly improved its balance sheet [10][43] - The company ended the quarter with a net leverage of 1.6 times, a significant improvement from 4.1 times in the previous quarter [44] Q&A Session Summary Question: What is the strategy for increasing platform conversions? - Management indicated that they are aggressively working on renewals and conversions to accelerate platform adoption, currently at about 20% [51][53] Question: What guidance can be provided for fiscal '25? - Guidance for fiscal '25 will be provided in February, but management believes they can grow off the pro forma 2024 results [57] Question: What are the timelines for seeing the impact of go-to-market investments? - Management stated that changes are being implemented now, with KPIs such as new customer acquisitions and platform attachments being key metrics to monitor [60][63] Question: How is the company approaching capital allocation? - The company plans to focus on internal investments, potential tuck-in acquisitions, and future share repurchases, maintaining leverage at or below two turns [66][104] Question: What is the outlook for the hardware market? - Management expects hardware demand to remain flat, with some recovery anticipated in self-checkout hardware revenues [70] Question: What is the current net site count trend? - The company is net adding sites across all segments, with no uptick in customer attrition [73] Question: What is the relationship between software and services growth and hardware? - The company is breaking the linkage between hardware and software, allowing for independent decisions in the enterprise space [76] Question: What investments are being made in the restaurant segment? - Investments will focus on accelerating cloud enablement and expanding value-added capabilities for QSR customers [107]