Slide 1: Q3 2022 Earnings Conference Call
1 Q3 2022 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, CEO OWEN SULLIVAN, PRESIDENT & COO TIM OLIVER, CFO October 25, 2022
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS. Comments made during this conference call and in these materials contain “forward- looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe h
Slide 3: Non-GAAP Measures
3 NON-GAAP MEASURES. While NCR reports its results in accordance with generally accepted accounting principles in the United States, or GAAP, comments made during this conference call and in these materials will include or make reference to certain "non- GAAP" measures, including: selected measures,
Slide 4: Overview
4 OVERVIEW Strong execution Revenue up 8% CC Y/Y; Recurring revenue up 7% CC Y/Y Adjusted EBITDA growth of 15% CC Y/Y Adjusted EBITDA margin 19.3%, up 230 bps from Q2 2022
Slide 5: Business Update
5 BUSINESS UPDATE Plan to separate NCR into two public companies Retail - Gaining traction in NCR EmeraldTM Hospitality - Another strong quarter Digital Banking – Winning in the market Payments - Solid year over year growth Self-Service Banking - Momentum in ATMaaS
Slide 6: Q3 2022 Financial Results
6 Adjusted EBITDA up 8% y/y as reported and up 15% CC Non-GAAP diluted EPS up 16% y/y as reported and up 40% CC; FX impact $(0.12) Free Cash Flow challenged by near term investments in working capital and timing of disbursements Total Revenue/Recurring Adjusted EBITDA Non-GAAP Diluted EPS Free Cash
Slide 7: Retail
7 $ in millions, except platform lanes RETAIL Revenue Adjusted EBITDA Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 $0 $70 $140 SCO RevenuePlatform Lanes ARR Up 16% y/y Key Metrics Up 2% y/yUp 202% y/y $541 $562 $104 $104 15,032 45,361 $997 $1,021 $277 $242 $575 $128 $1,017 35,700 $281 $271 3,587 $954 35% CC12% CC
Slide 8: Hospitality
8 $ in millions, except site counts HOSPITALITY Revenue Adjusted EBITDA Platform Sites ARR Up 32% y/y Up 8% y/y Key Metrics $224 $238 $44 $46 21,875 28,073 $474 $509 $238 $51 $510 28,852 $40118,629 Payments Sites Up 111% y/y 2,111 3,989 4,458 324 16% CC 8% CC
Slide 9: Digital Banking
9 $ in millions DIGITAL BANKING Revenue Adjusted EBITDA $128 Active Users ARR Down 1% y/y Up 3% y/y Key Metrics $131 $56 $52 18.9M 18.8M $462 $477 $137 $60 18.1M $477 17.5M $424 Registered Users Flat y/y 26.5M 26.6M 25.6M 24.3M 15% CC7% CC
Slide 10: Payments & Network
10 $ in millions PAYMENTS & NETWORK Revenue Adjusted EBITDA $304 Endpoints (in thousands) Transactions (in millions) ARR Up 25% y/y Up 2% y/y Up 11% y/y Key Metrics $332 18 $97 $111 574 584 $1,207 $1,334 104 129 $336 $114 573 $1,320130 94 $79 14% CC 7% CC
Slide 11: Self-Service Banking
11 $ in millions, except units and percentages SELF-SERVICE BANKING Revenue Adjusted EBITDA $637 Software & Services Revenue Mix ATMaaS Units ARR Flat y/y Up 185% y/y Up 4% y/y Key Metrics $679 66% $142 $155 4,386 4,454 $1,376 $1,411 69% 67% $640 $150 12,491 $1,435 69% 448 $1,300 1% CC 6% CC
Slide 12: Free Cash Flow, Net Debt & EBITDA
12 $ in millions Free Cash Flow Q3 2022 Q3 2021 Cash provided by operating activities $127 $497 Less: Total capital expenditures $(115) $(102) Less: Initial sale of Trade Accounts Receivable $— $(274) Plus: Restricted cash settlement activity ($43) $— Plus: Pension contributions $3 $4 Free Cash Flow
Slide 13: NCR Separation Plan
13 NCR Separation Plan (1) There can be no guarantee that the planned separation will be completed in the expected form or within the expected time frame or at all. Nor can there be any guarantee that the digital commerce business and ATM business after a separation will be able to realize any of th
Slide 14: NCR Separation Plan: RemainCo and ATM SpinCo
14 NCR Separation Plan (1) There can be no guarantee that the planned separation will be completed in the expected form or within the expected time frame or at all. Nor can there be any guarantee that the digital commerce business and ATM business after a separation will be able to realize any of th
Slide 15: Illustrative Separation
15 As of September 30, 2022 LTM WholeCo NCR RemainCo(3) ATM SpinCo(3) Revenue $7,869 $4,047 $3,822 Adjusted EBITDA(1) $1,343 $654 $689 Adjusted EBITDA margin %(1) 17.1% 16.2% 18.0% Capital expenditures ("CAPEX") $395 $267 $128 Targeted growth rates (2) WholeCo NCR RemainCo ATM SpinCo Revenue 6% - 9%
Slide 16: Current and Targeted Capital Structure
16 WholeCo Current Capital Structure NCR RemainCo Targeted Capital Structure Post Separation (2) $ in millions September 30, 2022 • Retain majority of current debt stack Total Unsecured Debt $3,300 • Minimize debt friction cost 5.750% Senior Notes due 2027 500 • Rework secured debt 5.000% Senior Not
Slide 17: Looking Forward
17 LOOKING FORWARD Strategic transformation to a software-led as-a-service company Allocate capital to highest return on investment opportunities Improve cost structure Drive cash flow generation Continue to execute in a difficult macro environment Plan to separate NCR into two public companies
Slide 18: Supplementary Materials
18 SUPPLEMENTARY MATERIALS
Slide 19: Q3 2022 GAAP Results
19 Q3 2022 Q3 2021 % Change Revenue $1,972 $1,901 4% Gross Margin 493 520 (5)% Gross Margin Rate 25.0% 27.4% Operating Expenses 306 363 (16)% % of Revenue 15.5% 19.1% Operating Income 187 157 19% % of Revenue 9.5% 8.3% Interest and other expense, net (75) (115) (35)% Income Tax Expense (Benefit) 43
Slide 20: Q3 2022 Operational Results
20 Q3 2022 Q3 2021 % Change as Reported % Change Adjusted Constant Currency Revenue (non-GAAP) $1,972 $1,901 4% 8% Gross Margin (non-GAAP) 528 546 (3)% 2% Gross Margin Rate (non-GAAP) 26.8% 28.7% Operating Expenses (non-GAAP) 279 331 (16)% (12)% % of Revenue 14.1% 17.4% Operating Income (non-GAAP) 2
Slide 21: Non-GAAP Measure Definitions
21 While NCR reports its results in accordance with generally accepted accounting principles (GAAP) in the United States, comments made during this conference call and in these materials will include non-GAAP measures. These measures are included to provide additional useful information regarding NC
Slide 22: Net Debt and Adjusted EBITDA Definitions
22 Net Debt and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA). NCR determines Net Debt based on its total debt less cash and cash equivalents, with total debt being defined as total short-term borrowings plus total long-term debt. NCR believes that Net Deb
Slide 23: Constant Currency Definition
23 Constant currency. NCR presents certain financial measures, such as period-over-period revenue growth, on a constant currency basis, which excludes the effects of foreign currency translation by translating prior period results at current period monthly average exchange rates. Due to the overall
Slide 24: GAAP to Non-GAAP Reconciliation: Adjusted EBITDA
24 Q3 2022 Q2 2022 Q3 2021 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 69 $ 35 $ 12 Transformation & Restructuring Costs 17 49 5 Acquisition-Related Amortization of Intangibles 44 45 45 Acquisition-Related Costs 1 3 9 Loss on Debt Extinguishment — — 42 Interest Expense
Slide 25: GAAP to Non-GAAP Reconciliation: LTM Adjusted EBITDA
25 Q3 2022 LTM Q2 2022 LTM Q3 2021 LTM Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 135 $ 78 $ (92) Pension Mark-to-Market Adjustments (118) (118) 34 Transformation & Restructuring Costs 139 127 222 Acquisition-Related Amortization of Intangibles 174 175 107 Acquisition-
Slide 26: Adjusted EBITDA by Segment
26 Q3 2022 Q2 2022 Q3 2021 Retail $ 128 $ 104 $ 104 Hospitality 51 46 44 Digital Banking 60 56 52 Payments & Network 114 97 111 Self-Service Banking 150 142 155 Corporate and Other (112) (98) (109) Eliminations (11) (8) (5) Adjusted EBITDA $ 380 $ 339 $ 352 ADJUSTED EBITDA BY SEGMENT $ in millions
Slide 27: Q3 2022 GAAP to Non-GAAP Reconciliation
27 Q3 QTD 2022 GAAP Transform ation Costs Acquisition- related amortization of intangibles Acquisition- related costs Russia Q3 QTD 2022 non-GAAP Product revenue $590 $— $— $— $— $590 Service revenue 1,382 — — — — 1,382 Total revenue 1,972 — — — — 1,972 Cost of products 524 (5) (1) — — 518 Cost of s
Slide 28: Q3 2022 Non-GAAP EPS Reconciliation
28 Q3 QTD 2022 GAAP Q3 QTD 2022 non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $69 $120 Dividends on convertible preferred shares $(4) $— Income from continuing operations attributable to NCR common stockhol
Slide 29: Q3 2021 GAAP to Non-GAAP Reconciliation
29 Q3 QTD 2021 GAAP Transformation Costs Acquisition- related amortization of intangibles Acquisition- related costs Debt Refinancing & Extinguishment Q3 QTD 2021 non-GAAP Product revenue $520 $— $— $— $— $520 Service revenue 1,381 — — — — 1,381 Total revenue 1,901 — — — — 1,901 Cost of products 429
Slide 30: Q3 2021 Non-GAAP EPS Reconciliation
30 Q3 QTD 2021 GAAP Q3 QTD 2021 non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $12 $102 Dividends on convertible preferred shares (4) — Income from continuing operations attributable to NCR common stockholde
Slide 31: Free Cash Flow Reconciliation
31 Q3 2022 Q2 2022 Q3 2021 Cash provided by operating activities $127 $80 $497 Less: Total capital expenditures $(115) $(94) $(102) Less: Sale of Accounts Receivables $— $— $(274) Plus: Pension contributions $3 $5 $4 Plus: Restricted Cash Settlement Activity ($43) $9 $— Free Cash Flow $(28) $— $125
Slide 32: Reconciliation of Constant Currency
32 Q3 2022 Operational Results % Change as Reported Favorable (Unfavorable) FX Impact % Change Adjusted Constant Currency Revenue (non-GAAP) 4% (4)% 8% Gross Margin (non-GAAP) (3)% (5)% 2% Operating Expenses (non-GAAP) (16)% 4% (12)% Operating Income (non-GAAP) 16% (9)% 25% Interest and other expens
Slide 33: Reconciliation of Constant Currency: Revenue Growth
33 Revenue Growth % (GAAP) Favorable (Unfavorable) FX Impact Revenue Growth % Constant Currency (non-GAAP) Retail 6 % (6) % 12 % Hospitality 6 % (2) % 8 % Digital Banking 7 % — % 7 % Payments & Network 11 % (3) % 14 % Self-Service Banking — % (6) % 6 % Other (23) % (5) % (18) % Eliminations 50 % — %
Slide 34: Reconciliation of Constant Currency: Adjusted EBITDA Growth
34 Adjusted EBITDA Growth % Favorable (Unfavorable) FX Impact Adjusted EBITDA Growth % Constant Currency (non-GAAP) Retail 23 % (12) % 35 % Hospitality 16 % — % 16 % Digital Banking 15 % — % 15 % Payments & Network 3 % (4) % 7 % Self-Service Banking (3) % (4) % 1 % Corporate and Other (3) % — % (3)
Slide 35: Thank You
35 THANK YOU