Slide 1: Q1 2022 Earnings Conference Call
1 Q1 2022 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, CEO OWEN SULLIVAN, PRESIDENT & COO TIM OLIVER, CFO April 26, 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 Unprecedented external macro impacts • Inflation • Interest rates • War • Omicron variant Revenue up 21% Y/Y; Recurring revenue up 35% Y/Y Adjusted EBITDA growth of 5% Y/Y Continued success transforming NCR
Slide 5: Business Update
5 BUSINESS UPDATE Board-led strategic review is ongoing Good momentum across strategic growth initiatives Retail - Strong growth in NCR Commerce software platform Hospitality - Momentum in platform sites continues Digital Banking – Continued positive momentum Payments - Gaining traction across Merch
Slide 6: Q1 2022 Financial Results
6 Adjusted EBITDA up 5% y/y Non-GAAP diluted EPS impacted by macro pressures Above expectations given seasonal factors Total Revenue/Recurring Adjusted EBITDA Non-GAAP Diluted EPS Free Cash Flow Revenue up 21% y/y; Recurring revenue up 35% y/y Q1 2022 FINANCIAL RESULTS Q1 21 Q2 21 Q3 21 Q4 21 Q1 22
Slide 7: Q1 2022E & Projected 2022 Impacts
7 Q1 2022E & Projected 2022 Impacts $ in millions Estimated Q1 2022 Impact Projected Full Year Impact Revenue EBITDA Revenue EBITDA COVID $60 $23 $50 $35 • December to March Omicron wave (Payments) • China lockdown & supply disruption War in Eastern Europe 30 7 100 15 • Eastern Europe direct revenue
Slide 8: Payments & Network
8 Q1 20 Q1 21 Q1 22 90 100 110 120 $ in millions PAYMENTS & NETWORK Revenue(1) Adjusted EBITDA(1) Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $175 $350 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $65 $130 $22 Q1 20 Q1 21 Q1 22 400.0 500.0 600.0 Endpoints (in thousands) Transactions (in millions) ARR Up 29% y/y Up 6% y/y
Slide 9: Digital Banking
9 $ in millions DIGITAL BANKING Revenue Adjusted EBITDA Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $70 $140 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $30 $60$123 Q1 20 Q1 21 Q1 22 16.0 18.0 20.0 Active Users ARR Down 2% y/y Q1 20 Q1 21 Q1 22 $390 $420 $450 Up 2% y/y Key Metrics $133 $52$54 18.5M 18.0M $451 $465 $136 $
Slide 10: Self-Service Banking
10 Q1 20 Q1 21 Q1 22 65% 70% 75% $ in millions, except units and percentages SELF-SERVICE BANKING Revenue Adjusted EBITDA Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $400 $800 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $80 $160 $628 Q1 20 Q1 21 Q1 22 0.0 2,300.0 4,600.0 Software & Services Revenue Mix ATMaaS Units ARR U
Slide 11: Retail
11 $ in millions, except platform lanes RETAIL Revenue Adjusted EBITDA Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $325 $650 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $70 $140 SCO RevenuePlatform Lanes Q1 20 Q1 21 Q1 22 0 8,500 17,000 25,500 ARR Up 8% y/y Q1 20 Q1 21 Q1 22 $875 $1,000 $1,125 Q1 20 Q1 21 Q1 22 $0 $200 $
Slide 12: Hospitality
12 $ in millions, except site counts HOSPITALITY Revenue Adjusted EBITDA Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $125 $250 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 $0 $25 $50 Platform Sites ARR Q1 20 Q1 21 Q1 22 18,000 22,500 27,000 Up 37% y/y Up 14% y/y Q1 20 Q1 21 Q1 22 $400 $450 $500 Key Metrics $179 $231 $36 $39
Slide 13: Free Cash Flow, Net Debt & EBITDA
13 Free Cash Flow Q1 2022 Q1 2021 Cash provided by operating activities $38 $155 Less: Total capital expenditures ($80) ($61) Plus: Restricted Cash Settlement Activity $28 ($5) Plus: Pension contributions $4 $4 Free Cash Flow ($10) $93 $ in millions FREE CASH FLOW, NET DEBT & EBITDA Net Debt & EBITD
Slide 14: Outlook
14 OUTLOOK Revenue of approximately $8 billion – Higher growth in second half of year on higher transaction volumes and hardware parts availability Adjusted EBITDA of $1.4 - $1.5 billion – $50 - $75 million of improvement across each of the remaining three quarters Free Cash Flow of $400 - $500 mill
Slide 15: Looking Forward
15 LOOKING FORWARD Continued transformation to a software-led as-a-service company Continue board-led strategic review process to unlock shareholder value Address external macro headwinds
Slide 16: Supplementary Materials
16 SUPPLEMENTARY MATERIALS
Slide 17: Q1 2022 GAAP Results
17 Q1 2022 Q1 2021 % Change Revenue $1,866 $1,544 21% Gross Margin 411 414 (1)% Gross Margin Rate 22.0% 26.8% Operating Expenses 378 304 24% % of Revenue 20.3% 19.7% Operating Income 33 110 (70)% % of Revenue 1.8% 7.1% Interest and other expense, net (54) (62) (13)% Income Tax Expense (Benefit) 13 1
Slide 18: Q1 2022 Operational Results
18 Q1 2022 Q1 2021 % Change Revenue (non-GAAP) $1,863 $1,544 21% Gross Margin (non-GAAP) 449 425 6% Gross Margin Rate (non-GAAP) 24.1% 27.5% Operating Expenses (non-GAAP) 325 277 17% % of Revenue 17.4% 17.9% Operating Income (non-GAAP) 124 148 (16)% % of Revenue 6.7% 9.6% Interest and other expense
Slide 19: Non-GAAP Measure Definitions
19 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 20: Net Debt and Adjusted EBITDA Definitions
20 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 21: GAAP to Non-GAAP Reconciliation: Adjusted EBITDA
21 Q1 2022 Q4 2021 Q1 2021 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ (33) $ 64 $ 30 Pension Mark-to-Market Adjustments — (118) — Transformation & Restructuring Costs 27 46 8 Acquisition-Related Amortization of Intangibles 41 44 20 Acquisition-Related Costs 5 6 27 Inte
Slide 22: GAAP to Non-GAAP Reconciliation: LTM Adjusted EBITDA
22 Q1 2022 LTM Q4 2021 LTM Q1 2021 LTM Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 34 $ 97 $ — Pension Mark-to-Market Adjustments (118) (118) 34 Transformation & Restructuring Costs 85 66 237 Acquisition-Related Amortization of Intangibles 153 132 79 Acquisition-Related
Slide 23: Adjusted EBITDA by Segment
23 Q1 2022 Q4 2021 Q1 2021 Payments & Network $ 98 $ 105 $ 3 Digital Banking 56 52 54 Self-Service Banking 112 148 137 Retail 67 119 98 Hospitality 41 39 36 Corporate and Other (97) (104) (67) Eliminations (6) (6) (3) Adjusted EBITDA $ 271 $ 353 $ 258 ADJUSTED EBITDA BY SEGMENT $ in millions
Slide 24: Q1 2022 GAAP to Non-GAAP Income Statement
24 Q1 QTD 2022 GAAP Transform ation Costs Acquisition- related amortization of intangibles Acquisition- related costs Russia Q1 QTD 2022 non-GAAP Product revenue $516 $— $— $— $— $516 Service revenue 1,350 — — — (3) 1,347 Total revenue 1,866 — — — (3) 1,863 Cost of products 492 (1) (2) — (7) 482 Cos
Slide 25: Q1 2022 Diluted EPS Reconciliation
25 Q1 QTD 2022 GAAP Q1 QTD 2022 non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) ($33) $49 Dividends on convertible preferred shares ($4) $— Income from continuing operations attributable to NCR common stockho
Slide 26: Q1 2021 GAAP to Non-GAAP Income Statement
26 Q1 QTD 2021 GAAP Transformation Costs Acquisition- related amortization of intangibles Acquisition- related costs Q1 QTD 2021 non- GAAP Product revenue $482 $— $— $— $482 Service revenue 1,062 — — — 1,062 Total revenue 1,544 — — — 1,544 Cost of products 408 — (3) — 405 Cost of services 722 (4) (4
Slide 27: Q1 2021 Diluted EPS Reconciliation
27 Q1 QTD 2021 GAAP Q1 QTD 2021 non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $30 $73 Dividends on convertible preferred shares ($4) $— Income from continuing operations attributable to NCR common stockhold
Slide 28: GAAP to Non-GAAP Reconciliation: Free Cash Flow
28 Q1 2022 Q4 2021 Q1 2021 Cash provided by operating activities $38 $270 $155 Less: Total capital expenditures ($80) ($106) ($61) Less: Sale of Accounts Receivables $— ($26) $— Plus: Pension contributions $4 $4 $4 Plus: Restricted Cash Settlement Activity $28 ($42) ($5) Free Cash Flow ($10) $100 $9
Slide 29: Thank You
29 THANK YOU