10-K: NCR Voyix Completes Strategic Transformation, Focuses on Recurring Revenue Growth in Retail and Restaurant Sectors

NCR Voyix finalizes its strategic shift towards a platform-led software and services model, selling its Digital Banking business and transitioning its hardware operations to Ennoconn.

Summary

• NCR Voyix completed the sale of its Digital Banking segment for $2.45 billion in cash plus potential contingent consideration.
• The company is transitioning its self-checkout and point-of-sale hardware businesses to an outsourced design and manufacturing model with Ennoconn.
• Revenue for 2024 was $2.8 billion, an 11% decrease compared to the prior year.
• Recurring revenue increased 1% year-over-year and comprised 58% of total revenue.
• Software and services revenue decreased 3% from the prior year, making up 73% of total revenue.
• Adjusted EBITDA was $347 million, a 3% increase compared to the prior year.
• The company is focused on driving subscription-based revenue and earnings growth through platform conversions and expansion of cloud solutions.
• NCR Voyix is prioritizing capital allocation to platform investments, technology, and stock repurchases.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While the company has completed strategic actions and is focusing on recurring revenue growth, there are also declines in revenue and expenses related to a cyber incident and fraudulent activities. The future outlook is positive, but risks and uncertainties remain.

Positives

• Recurring revenue increased 1% year-over-year.
• Adjusted EBITDA increased 3% compared to the prior year.
• The company is focused on platform-led software and services for the retail and restaurant industries.
• The company is prioritizing capital allocation to platform investments, technology, and stock repurchases.

Negatives

• Revenue decreased 11% compared to the prior year.
• Software and services revenue decreased 3% from the prior year.
• The company incurred $47 million of expenses related to a cyber ransomware incident.
• The company identified fraudulent automated clearing house (ACH) disbursements from a company bank account.

Risks

• Failure to successfully execute the growth strategy could negatively impact operating results.
• Inability to protect systems and data from cybersecurity threats could adversely affect business operations.
• Evolving global laws and regulations relating to data privacy may require substantial compliance costs.
• Reliance on third-party suppliers and licenses could harm the business.
• Changes in U.S. or foreign trade policies may adversely impact business and operating results.
• The company's level of indebtedness could limit financial and operating activities.
• Failure to maintain effective internal control over financial reporting could have a material adverse effect on results.

Future Outlook

The company is focused on driving subscription-based revenue and earnings growth through platform conversions and expansion of cloud solutions. NCR Voyix expects the Hardware Business Transition to become effective during 2025.

Management Comments

• The company is focused on driving subscription-based revenue and earnings growth through platform conversions and expansion of cloud solutions.
• NCR Voyix is prioritizing capital allocation to platform investments, technology, and stock repurchases.

Industry Context

The global retail and restaurant technology landscape is characterized by rapid advancement and evolution. As a result, competition continues to intensify in these industries. Business and consumer expectations are high, with a focus on speed, convenience, choice and security.

Comparison to Industry Standards

• Key competitors include Aptos, Inc., Block Inc., Diebold Nixdorf, Inc., Fiserv Inc., Flooid, Fujitsu Limited, GK Software SE, Global Payments Inc., HP Inc., Lightspeed, Olo Inc., Oracle Corporation, PAR Technology Corporation, SAP SE, Toast, Inc., Toshiba Tec Corporation, among others.
• We also compete with certain global enterprise technology companies including IBM Corporation and CompuCom to provide technology and support services.

Legal Proceedings

• The Company is involved in legal proceedings related to environmental matters, including the Kalamazoo River matter.
• The Company is contesting a court ruling in a class action lawsuit related to nonqualified deferred compensation retirement plans.

Stakeholder Impact

• The strategic actions executed by the Company in 2024 are aimed at improving the balance sheet, streamlining operations, and improving cash flows, which should benefit shareholders.
• The transition of the hardware business to an outsourced model may impact employees involved in those operations.
• The company's focus on customer needs and innovative products is intended to deliver increased value to customers.

Next Steps

• The company expects the Hardware Business Transition to become effective during 2025.
• The Company expects to resolve certain tax matters related to U.S. and foreign jurisdictions during 2025.

Key Dates