8-K: NCR Voyix Provides 2024 Financial Guidance and Preliminary 2023 Results

NCR Voyix Corporation released preliminary full year and fourth quarter 2023 financial results and provided 2024 guidance metrics, adjusting for the spin-off of NCR Atleos and other divestitures.

Summary

• NCR Voyix Corporation has provided preliminary financial results for 2023 and guidance for 2024.
• The company completed the spin-off of NCR Atleos Corporation on October 16, 2023, and historical financials have been adjusted to reflect this.
• Certain costs historically allocated to NCR Atleos are now included in NCR Voyix's continuing operations, impacting comparability with previous estimates.
• The company has provided Adjusted EBITDA to address these comparability issues.
• Transfers of NCR Atleos-related operations in foreign countries are ongoing, further impacting financial results.
• Full year 2024 revenue is projected to be between $3.6 billion and $3.7 billion.
• Software and services revenue is expected to be between $2.7 billion and $2.75 billion.
• Hardware revenue is projected to be between $900 million and $950 million.
• Adjusted EBITDA is guided to be between $632 million and $657 million, with an adjusted EBITDA margin of 17.5% to 17.7%.
• Adjusted EPS is expected to be between $0.84 and $0.94.
• Free cash flow is projected to be between $155 million and $185 million.
• The non-GAAP tax rate is estimated to be between 27% and 29%.

Sentiment

Score: 5

Explanation: The document presents a mixed picture with positive guidance for 2024 but also includes downward revisions and challenges related to the spin-off and divestitures. The sentiment is neutral to slightly negative due to the lowered guidance.

Positives

• The company is projecting positive revenue growth in 2024.
• Software and services revenue is expected to be a significant portion of total revenue.
• The company is projecting positive Adjusted EBITDA and free cash flow for 2024.
• The company's ARR and Software ARR have shown year-over-year growth.
• The company has identified additional cost takeout opportunities in its annualized $100M cost savings plan.

Negatives

• The spin-off of NCR Atleos has created complexities in financial reporting and comparability.
• The company has revised its initial 2024 outlook downwards due to divestitures, commercial agreements with NCR Atleos, and hardware performance.
• Hardware revenue is expected to decline year-over-year.
• The company is experiencing some negative impacts from business performance related items across all three segments.
• The company has incurred costs related to the spin-off and other special items.

Risks

• The company faces challenges in transforming and growing its business, including attracting new customers and increasing platform usage.
• There are risks associated with developing and selling complex new solutions, including those using artificial intelligence.
• The company's ability to compete effectively against new and existing competitors is a risk.
• The timing and implementation of cost reduction initiatives could impact results.
• The company faces risks related to cybersecurity incidents and compliance with data protection laws.
• Domestic and global economic conditions could impact the company's performance.
• The company's indebtedness and failure to maintain effective internal control over financial reporting are risks.
• The company is still in the process of transferring some NCR Atleos-related operations in foreign countries, which could impact financial results.

Future Outlook

The company has provided financial guidance for the full year 2024, including revenue, Adjusted EBITDA, Adjusted EPS, and free cash flow estimates. The company expects to continue to transfer NCR Atleos-related operations in foreign countries.

Management Comments

• Members of the management team of NCR Voyix Corporation will present selected preliminary full year and fourth quarter 2023 financial results and selected 2024 guidance metrics in meetings with investors.

Industry Context

The spin-off of NCR Atleos reflects a trend of companies focusing on core business segments. The company's focus on software and services aligns with the broader industry shift towards recurring revenue models. The company's performance will be closely watched by investors and competitors in the retail, restaurant, and digital banking technology sectors.

Comparison to Industry Standards

• NCR Voyix's adjusted EBITDA margin guidance of 17.5% to 17.7% is comparable to other established technology companies in the software and services sector, such as Fiserv (which has a similar adjusted operating margin).
• The company's focus on recurring revenue through software and services is in line with industry trends, similar to companies like Oracle and SAP.
• The hardware revenue decline is a concern, as many technology companies are shifting away from hardware-centric models, similar to the trend seen in the PC and server markets.
• The company's ARR growth of 5% is moderate compared to high-growth SaaS companies, which often see ARR growth rates of 20% or more, such as Salesforce or ServiceNow.
• The company's free cash flow guidance of $155M to $185M is a positive sign, but it is important to compare this to the capital expenditure requirements of the business and the free cash flow generation of its competitors.

Stakeholder Impact

• Shareholders will be impacted by the revised financial guidance and the complexities of the spin-off.
• Employees may be impacted by the ongoing cost reduction initiatives.
• Customers may be impacted by the company's focus on software and services.
• Suppliers may be impacted by the company's changing business model.
• Creditors will be impacted by the company's financial performance and debt levels.

Next Steps

• The company will continue to transfer NCR Atleos-related operations in foreign countries.
• The company will continue to implement its cost reduction initiatives.
• The company will continue to engage with investors regarding its financial results and guidance.

Key Dates

Keywords

financial guidance, adjusted EBITDA, revenue, spin-off, NCR Voyix, recurring revenue, software, hardware, financial results, ARR