8-K: NCR Voyix Reports Preliminary 2023 Results, Files Extension for Annual Report

NCR Voyix announced preliminary full year and fourth quarter 2023 financial results, along with a filing extension for its annual report due to a fraud incident and spin-off complexities.

Summary

• NCR Voyix reported preliminary financial results for the fourth quarter and full year 2023, following the spin-off of NCR Atleos in October 2023.
• Full year revenue reached $3.83 billion, a 1% increase year-over-year, while fourth quarter revenue was $963 million, flat compared to the same period last year.
• The company experienced a net loss from continuing operations of $585 million for the full year and $255 million for the fourth quarter.
• Adjusted EBITDA for the full year was $618 million, a 4% increase year-over-year, and $134 million for the fourth quarter, a 19% decrease year-over-year.
• Software and services revenue grew by 4% for the full year and 2% in the fourth quarter.
• The company added approximately 14,000 customer sites to its platform and doubled the number of payment sites in 2023.
• NCR Voyix has provided 2024 guidance, projecting total revenue between $3.6 billion and $3.7 billion, and adjusted EBITDA between $632 million and $657 million.
• The company identified approximately $23 million in fraudulent ACH disbursements, with $10.5 million not correctly recorded in prior financial statements, and expects to record an additional $5 million in unauthorized disbursements in the first quarter of 2024.
• NCR Voyix has filed an extension for its Annual Report on Form 10-K, expecting to file by March 15, 2024.

Sentiment

Score: 4

Explanation: The document contains mixed signals. While there is some positive growth in revenue and adjusted EBITDA for the full year, the significant net loss, the decrease in Q4 adjusted EBITDA, the fraudulent activity, and the delay in the annual report filing are major concerns. The forward guidance is positive but the risks are significant.

Positives

• Full year revenue increased by 1% to $3.83 billion.
• Full year adjusted EBITDA increased by 4% to $618 million.
• Software and services revenue saw a 4% growth for the full year.
• The company successfully added 14,000 customer sites to its platform.
• The number of payment sites doubled in 2023.
• The company signed over 650 new logos across its three segments.
• The company is projecting positive revenue and adjusted EBITDA for 2024.

Negatives

• The company experienced a net loss from continuing operations of $585 million for the full year.
• Fourth quarter adjusted EBITDA decreased by 19% year-over-year.
• The company identified $23 million in fraudulent ACH disbursements.
• The company has filed an extension for its Annual Report on Form 10-K.
• The company identified material weaknesses in its internal control over financial reporting related to the unauthorized ACH disbursements.

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 is exposed to cybersecurity risks, as highlighted by the April 2023 ransomware incident.
• The company faces risks related to its indebtedness and access to capital markets.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company is subject to risks related to the spin-off of NCR Atleos, including potential tax liabilities and unforeseen impacts.

Future Outlook

NCR Voyix provided fiscal year 2024 guidance, projecting total revenue between $3.6 billion and $3.7 billion, software and services revenue between $2.7 billion and $2.75 billion, and adjusted EBITDA between $632 million and $657 million. The company also expects free cash flow between $155 million and $185 million.

Management Comments

• David Wilkinson, NCR Voyix CEO, stated that the company had a solid 2023 and delivered revenue and adjusted EBITDA results in line with expectations.
• Brian Webb-Walsh, NCR Voyix CFO, expressed pleasure with the company's accomplishments in 2023, including growing software and services revenue and expanding platform and payment sites.
• Management stated they are focused on productivity and efficiencies across the organization to drive margin expansion and free cash flow in 2024.

Industry Context

NCR Voyix operates in the competitive digital commerce solutions market, serving the retail, restaurant, and digital banking industries. The company's focus on platform-led SaaS and services aligns with the industry trend towards digital transformation and recurring revenue models. The spin-off of NCR Atleos allows NCR Voyix to focus on its core business and pursue growth opportunities in these sectors.

Comparison to Industry Standards

• NCR Voyix competes with companies like Toast in the restaurant POS space, and Fiserv and Jack Henry in the digital banking sector.
• The company's adjusted EBITDA margin of 16.1% for 2023 is comparable to some peers but lower than others, indicating room for improvement.
• The company's growth in software and services revenue is a positive sign, as this is a key area of focus for many technology companies.
• The company's customer base of over 300,000 sites is a significant asset, but it needs to continue to innovate and expand its platform to maintain its competitive edge.
• The fraudulent ACH disbursements are a significant issue that needs to be addressed to restore investor confidence.

Stakeholder Impact

• Shareholders may be concerned about the net loss, the decrease in Q4 adjusted EBITDA, the fraudulent activity, and the delay in the annual report filing.
• Employees may be affected by the company's focus on productivity and efficiencies.
• Customers may be impacted by the company's ongoing platform development and service expansion.
• Creditors may be concerned about the company's indebtedness and cash flow.

Next Steps

• The company will file its Annual Report on Form 10-K by March 15, 2024.
• The company will continue to investigate the fraudulent ACH disbursements and attempt to recover the funds.
• The company will focus on productivity and efficiencies to drive margin expansion and free cash flow in 2024.
• The company will continue to invest in its platform and expand its services.

Key Dates

Keywords

NCR Voyix, Financial Results, Adjusted EBITDA, Software and Services, Spin-off, Fraudulent Disbursements, Annual Report, Revenue, Digital Banking, Retail, Restaurants