NCR Voyix Corp Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Leadership Changes: Nick East appointed Chief Product Officer to oversee product innovation and marketing. Two executives based outside US for broader international perspective.
• Recent Performance: Signed new mid-market/enterprise customers, expanded relationships, progressed on hardware ODM and card acquiring. Working on cloud-native platform and payment initiatives launching in H2 2025.
• Hardware Business: US market 60% of hardware sales. Tariff surcharges from China-based suppliers, run rate $8-12M, up to $20M if all suppliers charge. Mitigating by sourcing lower tariff markets. ODM with Ennoconn on track for pilot summer, operational year-end.
• Payments: Integrating WorldPay's front-end processing, launched payments training for sales teams. Positive feedback from customer meetings.
• Capital Allocation: Completed $25M share repurchases in Q1, total $125M since Nov 2024. Board increased share repurchase authority to $200M.
• Voyix Commerce Platform: Shifted to cloud-native architecture. Launching cloud-native and edge applications later in 2025, sunsetting legacy on-prem apps.

Segment Performance

• Restaurants: Signed nearly 200 new software and services customers. Platform and payment sites increased by 5% and 6% respectively. Software ARR and total ARR decreased 1% but modestly increased when adjusting for timing. Won multiyear contracts with Ziggi's Coffee, Renewed/expanded with Raising Cane's and Buffalo Wild Wings. Mid-market business had 97% payments attachment for new customer signings.
• Retail: Signed over 30 new software and services customers. Platform and payment sites increased by 48% and 14% respectively. Software ARR increased 9% and total ARR increased 4%. Renewed/expanded with Morrisons, grocery outlet, pilot company, and a Japanese department store.
• Overall: Total revenue $617 million, down 13% due to hardware and one-time revenue. Recurring revenue 66% of total, up 2%. Software ARR and total segment ARR up 5% and 2%. Platform sites 77,000, up 27%. Adjusted EBITDA $75 million, up 19%, margin 12.2%.

Guidance

• Tariffs: Run rate of tariff-related costs $8-12M, up to $20M if all suppliers charge. Mitigation in place, guidance maintained.
• Revenue: Currency-neutral revenue $2.575B-$2.65B, 9%-6% decline, improving throughout year.
• Adjusted EBITDA: $420M-$445M, increase 21%-28%. Margin 16.3%-16.8%, up 400-450 basis points.
• EPS: Non-GAAP diluted EPS $0.75-$0.80.
• Free Cash Flow: $170M-$190M, excluding restructuring, taxes, and investments.

Risks

• Tariffs: Uncertainty in trade and tariff environment, potential cost increases if suppliers implement surcharges.
• Market Conditions: Retailers facing tough times, but ongoing interest in self-checkout and platform innovation, but economic uncertainties could impact spending.

Question and Answer

Q: Broader update on self-checkout demand?

A: Darren Wilson says retailers interested in self-checkout for cost efficiency, shrink efficiency, and platform innovation linked to data collection.

Q: Tariff mitigation and restructuring spend?

A: Brian Webb-Walsh says restructuring spend ~$65M, Jim Kelly says mitigating tariffs by sourcing lower tariff suppliers.

Q: Payments timing and retail KPI?

A: Jim Kelly says WorldPay integration on track, retail KPI now includes WorldPay for SMB clients.

Q: Macro backdrop impact on customers?

A: Jim Kelly says no pullback seen, customers eager to upgrade to platform, maintaining guidance due to strong customer relationships.

Q: WorldPay partnership pitch to retail clients?

A: Jim Kelly and Darren Wilson say pitch is on total value, end-to-end integrated solution, single relationship instead of multiple vendors.