Diebold Nixdorf, Incorporated (DBD) Earnings

Management highlights

### Commercial Momentum & Overall Performance - Order entry grew 3% year-over-year and 6% sequentially, with first-half 2026 order entry reaching the highest level in four years - Backlog grew sequentially to $814 million, supporting full-year 2026 delivery expectations - Total company revenue increased 1% year-over-year and 4% sequentially to $928 million; adjusted EBITDA grew 8% year-over-year and 22% sequentially to $121 million; adjusted EPS increased 17% year-over-year to $1.10 Banking Business Progress - Core ATM franchise secured multiple key wins: a 1,100-unit DN Series order with a new UK customer (plus long-term service agreement), a 600-unit DN Series recycler fleet refresh for a key Mexico customer, and a full legacy fleet replacement contract with one of South Africa's largest banks - Achieved record teller cash recycler shipments from the North Canton facility, reflecting growing customer adoption of the expanded branch automation strategy beyond ATMs - Dynamic transaction middleware platform (which connects physical and digital banking systems) is used by most of the top 5 North American financial institutions, and received two international industry awards in Q2 - Fit-for-purpose products for the Indian market are gaining traction with a growing pipeline, representing a high-potential long-term growth opportunity given the large market size and low current market share Retail Business Progress - Secured multiple large regional wins: a 4,000-unit POS order in Germany, a 1,600-unit POS order in Romania, an 800-unit new logo win in Germany, a 1,500-lane self-checkout deployment with a major UK retailer, and multiple new logo wins (two grocers, a quick-serve restaurant chain, and a large fashion retailer) in North America - SmartVision AI checkout solution gained significant enterprise-scale traction: new multi-year contracts signed in Q2 will expand deployments to thousands of lanes by end-2026, including a 1,400-lane deal with two large European grocers (the largest deployment to date) - Revenue growth remains strong across both Europe (market leader position) and fast-growing North America, which remains a largely untapped large market opportunity Service Operations Improvement - Achieved record service levels for the second consecutive quarter in North America and globally, leading the industry in response times and service availability - Service margins improved 10 basis points sequentially despite near-term investment in the North America fleet renewal program; the largest phase of this investment cycle is now complete - Lean initiatives improved parts availability and first-call service resolution, directly supporting higher service performance Lean Operational Efficiency - Lean principles are applied across all business functions to improve productivity, reduce costs, and support scalable growth - Examples of improvements: 25% output increase at the Powderborn manufacturing facility without added operating costs; 50% reduction in dispatch times and $200,000 annual labor savings at North Camden; improved parts planning for service operations - Disciplined cost management reduced operating expenses 4% year-over-year in Q2

Guidance

- Full-year 2026 revenue guidance is reaffirmed at $3.86 billion to $3.94 billion, supported by recurring service revenue and $814 million in product backlog - Full-year operating expense guidance is updated to a 2% year-over-year decline, at the higher end of the prior 1% to 2% range, driven by better-than-expected cost efficiency gains - Full-year product gross margin is now expected to be comparable to 2025 (down from prior expectations for modest growth), pressured by higher memory costs and a higher mix of retail point of sale products; service gross margin guidance is maintained, with an expected improvement of up to 50 basis points for the full year - Adjusted EBITDA guidance is reaffirmed at $510 million to $535 million - Full-year adjusted EPS guidance is reaffirmed at $5.25 to $5.75, with an expected effective full-year tax rate of 35% to 40% - Full-year free cash flow guidance is reaffirmed at $255 million to $270 million, excluding a one-time $50 million catch-up cash tax payment for 2024 and 2025 related to German profitability; free cash flow is expected to be weighted heavily to Q4, with similar outflow levels in Q3 compared to Q2, followed by a $100 million to $120 million inventory reduction and working capital improvements in Q4 that will drive significant free cash flow improvement - Q3 2026 revenue is expected to represent ~25% of full-year revenue at the midpoint, with adjusted EBITDA expected to represent ~24% of full-year adjusted EBITDA at the midpoint, and gross margin expected to be ~25% (flat sequentially excluding the Q2 tariff refund)

Segment performance

1. Banking Segment: Revenue decreased 6% year-over-year and increased 2% sequentially. Total gross margin increased 100 basis points year-over-year to 28.5%. Banking product gross margin reached 36.8% (up 620 basis points year-over-year, 540 basis points sequentially); excluding the $13 million one-time tariff refund benefit, banking product gross margin was 32.5% (up 190 basis points year-over-year, a new record). Banking service gross margin was 23.6% (down 180 basis points year-over-year, 10 basis points sequentially), impacted by fleet investment and lower project volume. Banking contributed approximately 68% of total company revenue in Q2 2026. 2. Retail Segment: Revenue increased 24% year-over-year and 9% sequentially, with both product and service revenue delivering double-digit year-over-year growth for the second consecutive quarter. Total gross profit increased 15% year-over-year to $64 million; total gross margin was 21.9% (down 180 basis points year-over-year, 70 basis points sequentially), pressured by higher memory costs and a higher mix of lower-margin point of sale products. Retail service gross margin improved 230 basis points year-over-year to 28.2%. Retail contributed approximately 32% of total company revenue in Q2 2026.

Risks & headwinds

- Ongoing elevated memory component costs for the electronic point of sale portfolio create a near-term margin headwind, and the future memory pricing environment remains uncertain - Inventory was intentionally increased to secure component supply for second-half customer deployments, which reduced Q2 free cash flow and will keep inventory and free cash flow elevated in Q3 before normalization in Q4 - A large public sector banking tender in Brazil that was originally expected to contribute revenue in 2026 has been pushed to 2027, creating timing risk for 2026 banking revenue - Coordinating full branch automation deployments (rather than standalone ATM installations) adds complexity that can lead to slower-than-expected deployment timing - Profitability in German subsidiaries has exhausted net operating losses, leading to a permanent $25 million to $30 million increase in annual cash tax run rate starting in 2027, in addition to a one-time $50 million catch-up payment for 2024 and 2025

Analyst Q&A

• Q: Management has guided to a heavily Q4-weighted full-year result, with larger EBITDA and free cash flow contributions in Q4. What gives management confidence this material shift in timing will work out as planned?

  A: Near-term service margin pressure in Q2 came from concentrated timing of the fleet renewal investment, which was a one-time dynamic that does not change the long-term service margin growth trajectory. Banking revenue that was pushed out of Q2 to Q3 and Q4 is already secured in backlog, and first-half order entry is the highest in four years, giving clear line of sight to converting that backlog to revenue and cash flow by year end.

• Q: What is the outlook for North American retail growth in 2027, and how is the company addressing the ongoing memory cost headwind?

  A: North American retail remains a largely untapped large market opportunity, and management expects it to continue delivering very high double-digit growth for the foreseeable future. The company has diversified its memory supply base, revised nearly all customer contracts to pass through memory cost increases (able to pass up to 100% of costs going forward), and reduced price quote validity from 90 days to 7 days to account for ongoing market volatility.

• Q: What is the status of the one-time German cash tax increase, and what is the geographic demand outlook for the ATM business?

  A: The $50 million higher 2026 cash tax is a one-time catch-up for 2024 and 2025; going forward, the annual cash tax run rate will increase by $25 million to $30 million due to exhausted German NOLs, but this does not change the company's long-term cash flow outlook. For ATMs: Europe has modest growth with strong market share gains; North America is seeing growing adoption of combined ATM/teller recycler solutions; LATAM has healthy demand despite the delayed Brazilian tender; and APAC will see strong second-half growth led by the expanding Indian market. Overall demand remains healthy with only timing shifts for large projects.

• Q: How has the Brinks/Alvio combination impacted Diebold's competitive positioning in banking?

  A: The combination will not close until Q1 2027, and no competitive impact has been seen to date. Alvio's new plan to resell teller cash recyclers actually validates Diebold's long-standing strategy of expanding beyond ATMs to full branch automation, which is a key competitive advantage for the company. Diebold remains vigilant for any future competitive changes and is confident in its integrated solution value proposition.