Slide 1: Q1 2023 Earnings Conference Call
1 Q1 2023 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, CEO OWEN SULLIVAN, PRESIDENT & COO TIM OLIVER, CFO May 4, 2023
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: Combined Segments
4 COMBINED SEGMENTS. Combined segment information is provided for illustrative purposes only and is not representative of actual post-separation performance and does not purport to represent what NCR’s (RemainCo) or NCR ATMCo’s (SpinCo) financial position and results of operations actually would hav
Slide 5: Overview
5 OVERVIEW Solid first quarter results Cybersecurity incident mitigated; critical applications recovered Revenue up 4% CC Y/Y Adjusted EBITDA growth of 19% CC Y/Y Recurring revenue up 7% CC Y/Y Free cash flow of $209 million On track to separate NCR into two public companies
Slide 6: Strategic Business Update
6 STRATEGIC BUSINESS UPDATE Strong execution advancing strategic growth initiatives Retail - Momentum in NCR EmeraldTM Hospitality - Continue growth in AlohaTM Digital Banking – Winning in the market Payments - Strong growth across Merchant acquiring and AllpointTM networks Self-Service Banking - Ac
Slide 7: Q1 2023 Financial Results
7 Adjusted EBITDA up 11% y/y as reported and up 19% CC Non-GAAP diluted EPS up 6% y/y as reported and up 27% CC; FX impact $(0.09) Strong Free Cash Flow driven by higher profitability and working capital improvements Total Revenue/Recurring Adjusted EBITDA Non-GAAP Diluted EPS Free Cash Flow Revenue
Slide 8: Retail
8 $ in millions, except platform lanes RETAIL Revenue Adjusted EBITDA Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $325 $650 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $70 $140 SCO RevenuePlatform Lanes Q1 21 Q1 22 Q1 23 20,000 40,000 60,000 ARR Flat y/y Q1 21 Q1 22 Q1 23 $950 $1,000 $1,050 LTM Q1 21 LTM Q1 22 LTM Q1 23
Slide 9: Hospitality
9 $ in millions, except site counts HOSPITALITY Revenue Adjusted EBITDA Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $125 $250 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $25 $50 Platform Sites ARR Q1 21 Q1 22 Q1 23 18,000 24,000 30,000 36,000 Up 16% y/y Up 12% y/y Q1 21 Q1 22 Q1 23 $400 $450 $500 $550 Key Strategic Metri
Slide 10: Digital Banking
10 $ in millions DIGITAL BANKING Revenue Adjusted EBITDA Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $70 $140 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $30 $60$136 Q1 21 Q1 22 Q1 23 17.0 18.0 19.0 20.0 Active Users ARR Up 6% y/y Q1 21 Q1 22 Q1 23 $450 $475 $500 Up 7% y/y Key Strategic Metrics $139 $54$56 18.1M 19.1M $4
Slide 11: Combined Segments: NCR (RemainCo)
11 $ in millions Combined Segments: NCR (RemainCo)(1) Revenue Adjusted EBITDA Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $400 $800 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $80 $160 $240$893 $953 $224 $164 $911 $199 Retail, Hospitality, Digital Banking 4% CC 29% CC (1) This combined segment information is provided for
Slide 12: Payments & Network
12 Q1 21 Q1 22 Q1 23 50 100 150 $ in millions PAYMENTS & NETWORK* Revenue Adjusted EBITDA Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $175 $350 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $65 $130 $299 LTM Q1 21 LTM Q1 22 LTM Q1 23 500 1,000 1,500 2,000 2,500 Endpoints (in thousands) Transactions (in millions) ARR Up 2%
Slide 13: Self-Service Banking
13 Q1 21 Q1 22 Q1 23 65% 70% 75% $ in millions, except units and percentages SELF-SERVICE BANKING Revenue Adjusted EBITDA Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $400 $800 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $80 $160 $611 Q1 21 Q1 22 Q1 23 0 6,000 12,000 18,000 Software & Services Revenue Mix ATMaaS Units ARR
Slide 14: Combined Segments: NCR ATMCo (SpinCo)
14 $ in millions Combined Segments: NCR ATMCo (SpinCo)(1) Revenue Adjusted EBITDA Payments & Network, Self-Service Banking, less Eliminations Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $400 $800 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 $0 $80 $160 $240$902 $999 $926 $204 $248 $213 6% CC 10% CC (1) This combined segment
Slide 15: Free Cash Flow, Net Debt & EBITDA
15 $ in millions Free Cash Flow Q1 2023 Q1 2022 Cash provided by operating activities $317 $38 Less: Total capital expenditures (83) (80) Plus: Restricted cash settlement activity (29) 28 Plus: Pension contributions 4 4 Free Cash Flow $209 $(10) FREE CASH FLOW, NET DEBT & EBITDA Net Debt & EBITDA Q1
Slide 16: 2023 Guidance
16 In millions, except per share amounts Guidance (1) Q2 2023 FY 2023 Revenue $1,900 - $2,000 $7,800 - $8,000 Adjusted EBITDA $340 - $360 $1,450 - $1,550 Non-GAAP Diluted EPS $0.70 - $0.76 $3.30 - $3.50 Free Cash Flow ~ $50 $400 - $500 Assumptions Interest expense $88 $330 Effective tax rate (non-GA
Slide 17: NCR Separation Roadmap
17 NCR SEPARATION ROADMAP(1) (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 commerce business and ATM business after a separation will be able to realize any of the
Slide 18: Looking Forward
18 LOOKING FORWARD Cybersecurity recovery expected in near future Congratulations CEO-Designates On track to separate NCR into two public companies Sequential quarterly operational and financial improvement
Slide 19: Supplementary Materials
@ncr SUPPLEMENTARY MATERIALS
Slide 20: Q1 2023 GAAP Results
20 Q1 2023 Q1 2022 % Change Revenue $1,891 $1,866 1% Gross Margin 466 411 13% Gross Margin Rate 24.6% 22.0% Operating Expenses 356 378 (6)% % of Revenue 18.8% 20.3% Operating Income 110 33 233% % of Revenue 5.8% 1.8% Interest and other expense, net (86) (54) 59% Income Tax Expense (Benefit) 14 13 Ef
Slide 21: Q1 2023 Operational Results
21 Q1 2023 Q1 2022 % Change as Reported % Change Adjusted Constant Currency Revenue (non-GAAP) $1,891 $1,863 2% 4% Gross Margin (non-GAAP) 496 453 9% 16% Gross Margin Rate (non-GAAP) 26.2% 24.3% Operating Expenses (non-GAAP) 290 295 (2)% 1% % of Revenue 15.3% 15.8% Operating Income (non-GAAP) 206 15
Slide 22: Non-GAAP measures definitions
22 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 23: Net Debt and Adjusted EBITDA definitions
23 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 24: Constant currency definition
24 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 25: GAAP to Non-GAAP Reconciliation
25 Q1 2023 Q4 2022 Q1 2022 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 9 $ (7) $ (33) Pension Mark-to-Market Adjustments — 8 — Transformation & Restructuring Costs — 30 27 Acquisition-Related Amortization of Intangibles 42 42 41 Acquisition-Related Costs — 1 5 Separatio
Slide 26: GAAP to Non-GAAP Reconciliation (LTM)
26 Q1 2023 LTM Q4 2022 LTM Q1 2022 LTM Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 106 $ 64 $ 34 Pension Mark-to-Market Adjustments 8 8 (118) Transformation & Restructuring Costs 96 123 85 Acquisition-Related Amortization of Intangibles 173 172 153 Acquisition-Related C
Slide 27: Adjusted EBITDA by Segment
27 Q1 2023 Q4 2022 Q1 2022 Retail $ 97 $ 116 $ 67 Hospitality 53 54 41 Digital Banking 49 54 56 Payments & Network 83 96 98 Self-Service Banking 138 161 112 Corporate and Other (110) (92) (97) Eliminations (8) (9) (6) Adjusted EBITDA $ 302 $ 380 $ 271 ADJUSTED EBITDA BY SEGMENT $ in millions
Slide 28: Q1 2023 QTD GAAP to non-GAAP
28 Q1 2023 QTD GAAP Transformation Costs Stock-based Compensation Acquisition- related amortization of intangibles Acquisition- related Costs Separation Costs Q1 2023 QTD non-GAAP Product revenue $521 $— $— $— $— $— $521 Service revenue 1,370 — — — — — 1,370 Total revenue 1,891 — — — — — 1,891 Cost
Slide 29: Q1 2023 EPS reconciliation
29 Q1 2023 QTD Q1 2023 QTD non- GAAP Income (loss) from continuing operations attributable to NCR common stockholders: Income (loss) from continuing operations (attributable to NCR) $9 $84 Dividends on convertible preferred shares $(4) $— Income (loss) from continuing operations attributable to NCR
Slide 30: Q1 2022 QTD GAAP to non-GAAP
30 Q1 2022 QTD GAAP Transformation Costs Stock-based Compensation Costs Acquisition- related amortization of intangibles Acquisition- related costs Russia Q1 2022 QTD non-GAAP Product revenue $516 $— $— $— $— $— $516 Service revenue 1,350 — — — — (3) 1,347 Total revenue 1,866 — — — — (3) 1,863 Cost
Slide 31: Q1 2022 EPS reconciliation
31 Q1 2022 QTD GAAP Q1 2022 QTD non- GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $(33) $80 Dividends on convertible preferred shares $(4) $— Income from continuing operations attributable to NCR common stockh
Slide 32: Q4 2022 QTD GAAP to non-GAAP
32 Q4 QTD 2022 GAAP Transformation Costs Stock-based Compensation Costs Acquisition- related amortization of intangibles Acquisition- related costs Separation Costs Valuation Allowance & Other Tax Pension Mark-to- Market Adjustments Q4 QTD 2022 non-GAAP Product revenue $631 $— $— $— $— $— $— $— $631
Slide 33: Q4 2022 EPS reconciliation
33 Q4 QTD 2022 GAAP Q4 QTD 2022 non-GAAP Income (loss) from continuing operations attributable to NCR common stockholders: Income (loss) from continuing operations (attributable to NCR) $(7) $145 Dividends on convertible preferred shares $(4) $— Income (loss) from continuing operations attributable
Slide 34: Free Cash Flow Reconciliation
34 Q1 2023 Q4 2022 Q1 2022 Cash provided by operating activities $317 $202 $38 Less: Total capital expenditures $(83) $(88) $(80) Plus: Pension contributions $4 $55 $4 Plus: Restricted cash settlement activity $(29) $33 $28 Free Cash Flow $209 $202 $(10) $ in millions GAAP TO NON-GAAP RECONCILIATION
Slide 35: Reconciliation of Combined Segments: Revenue
35 REVENUE Q1 2023 Q4 2022 Q1 2022 Retail $552 $575 $546 Hospitality 223 239 211 Digital Banking 136 139 136 Subtotal $911 $953 $893 Payments & Network $323 $319 $299 Self-Service Banking 613 691 611 Eliminations(1) (10) (11) (8) Subtotal $926 $999 $902 Other 54 57 68 Other adjustment(2) — — 3 Total
Slide 36: Reconciliation of Combined Segments: Adjusted EBITDA
36 ADJUSTED EBITDA Q1 2023 Q4 2022 Q1 2022 Retail $97 $116 $67 Hospitality 53 54 41 Digital Banking 49 54 56 Subtotal $199 $224 $164 Payments & Network $83 $96 $98 Self-Service Banking 138 161 112 Eliminations(1) (8) (9) (6) Subtotal $213 $248 $204 Corporate & Other(2) (110) (92) (97) Total NCR $302
Slide 37: Reconciliation of Constant Currency: Revenue
37 Q1 2023 - REVENUE Revenue Growth % (GAAP) Favorable (Unfavorable) FX Impact Revenue Growth % Constant Currency (non-GAAP) Retail 1 % (3) % 4 % Hospitality 6 % (1) % 7 % Digital Banking — % — % — % SUBTOTAL 2 % (2) % 4 % Payments & Network 8 % (3) % 11 % Self-Service Banking — % (4) % 4 % Eliminat
Slide 38: Reconciliation of Constant Currency: Adjusted EBITDA
38 Q1 2023 - Adjusted EBITDA Adjusted EBITDA Growth % Favorable (Unfavorable) FX Impact Adjusted EBITDA Growth % Constant Currency (non-GAAP) Retail 45 % (25) % 70 % Hospitality 29 % — % 29 % Digital Banking (13) % — % (13) % SUBTOTAL 21 % (8) % 29 % Payments & Network (15) % (1) % (14) % Self-Servi
Slide 39: Thank You
THANK YOU @NCcR