Slide 1: Q2 2023 Earnings Conference Call
1 Q2 2023 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, CEO OWEN SULLIVAN, PRESIDENT & COO TIM OLIVER, CFO (CEO DESIGNATE NCR ATLEOS) DAVID WILKINSON, PRESIDENT NCR COMMERCE (CEO DESIGNATE NCR VOYIX) August 2, 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 and Notes to Investors
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 Strong second quarter results Adjusted EBITDA margin expansion 260 bps Adjusted EBITDA growth of 17% CC Y/Y Recurring revenue up 5% CC Y/Y Adjusted free cash flow-unrestricted of $154 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: Q2 2023 Financial Results
7 Adjusted EBITDA up 15% y/y as reported and up 17% CC Non-GAAP diluted EPS up 3% y/y as reported and up 9% CC; FX impact $(0.05) Strong Adjusted free cash flow-unrestricted driven by higher profitability and working capital improvements Total Revenue/Recurring Adjusted EBITDA Non-GAAP Diluted EPS A
Slide 8: Retail
8 $ in millions, except platform lanes RETAIL Revenue Adjusted EBITDA Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $325 $650 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $70 $140 SCO RevenuePlatform Lanes Q2 21 Q2 22 Q2 23 20,000 40,000 60,000 80,000 ARR Down 2% y/y Q2 21 Q2 22 Q2 23 $1,000 $1,025 $1,050 LTM Q2 21 LTM Q2 2
Slide 9: Hospitality
9 $ in millions, except site counts HOSPITALITY Revenue Adjusted EBITDA Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $125 $250 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $25 $50 Platform Sites ARR Q2 21 Q2 22 Q2 23 18,000 24,000 30,000 36,000 Up 9% y/y Up 8% y/y Q2 21 Q2 22 Q2 23 $400 $450 $500 $550 Key Strategic Metrics
Slide 10: Digital Banking
10 $ in millions DIGITAL BANKING Revenue Adjusted EBITDA Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $70 $140 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $30 $60$131 Q2 21 Q2 22 Q2 23 17.0 18.0 19.0 20.0 Active Users ARR Up 6% y/y Q2 21 Q2 22 Q2 23 $450 $475 $500 Up 6% y/y Key Strategic Metrics $136 $49 $56 18.1M 19.2M $
Slide 11: Combined Segments: NCR (RemainCo)
11 $ in millions Combined Segments: NCR (RemainCo)(1) Total Revenue/Recurring Adjusted EBITDA Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $400 $800 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $80 $160 $240$931 $911 $199$206 $951 $236 Retail, Hospitality, Digital Banking 3% CC 16% CC (1) This combined segment information
Slide 12: Payments & Network
12 Q2 21 Q2 22 Q2 23 50 100 150 $ in millions PAYMENTS & NETWORK* Revenue Adjusted EBITDA Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $175 $350 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $65 $130$332 LTM Q2 21 LTM Q2 22 LTM Q2 23 500 1,000 1,500 2,000 2,500 Endpoints (in thousands) Transactions (in millions) ARR Up 1% y
Slide 13: Self-Service Banking
13 Q2 21 Q2 22 Q2 23 65% 70% 75% $ in millions, except units and percentages SELF-SERVICE BANKING Revenue Adjusted EBITDA Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $400 $800 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $80 $160 $679 Q2 21 Q2 22 Q2 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) Total Revenue/Recurring Adjusted EBITDA Payments & Network, Self-Service Banking, less Eliminations Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $400 $800 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 $0 $80 $160 $240 $999 $926 $981 $231 $213 $259 (1)% CC 14% CC (1) Thi
Slide 15: Adjusted Free Cash Flow-Unrestricted, Net Debt & EBITDA
15 $ in millions Adjusted Free Cash Flow-Unrestricted Q2 2023 Q2 2022 Cash provided by operating activities $227 $80 Less: Total capital expenditures (121) (94) Plus: Change in trade receivables facility 43 — Plus: Restricted cash settlement activity 1 9 Plus: Pension contributions 4 5 Adjusted Free
Slide 16: 2023 Guidance
16 In millions, except per share amounts Guidance (1) FY 2023 Revenue $7,800 - $8,000 Adjusted EBITDA $1,450 - $1,550 Non-GAAP Diluted EPS $3.30 - $3.50 Adjusted Free Cash Flow-Unrestricted $400 - $500 2023 GUIDANCE (1) With respect to our Adjusted EBITDA, Adjusted free cash flow-unrestricted and no
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 Unlock shareholder value Sequential quarterly operational and financial improvement On track to separate NCR into two public companies Strategic transformation to a software-led as-a-service company Virtual Debt & Equity Investor Day scheduled for September 5, 2023
Slide 19: Supplementary Materials
@ncr SUPPLEMENTARY MATERIALS
Slide 20: Q2 2023 GAAP Results
20 Q2 2023 Q2 2022 % Change Revenue $1,986 $1,997 (1)% Gross Margin 538 471 14% Gross Margin Rate 27.1% 23.6% Operating Expenses 390 368 6% % of Revenue 19.6% 18.4% Operating Income 148 103 44% % of Revenue 7.5% 5.2% Interest and other expense, net (99) (66) 50% Income Tax Expense (Benefit) 30 — Eff
Slide 21: Q2 2023 Operational Results
21 Q2 2023 Q2 2022 % Change as Reported % Change Adjusted Constant Currency Revenue (non-GAAP) $1,986 $1,991 —% 1% Gross Margin (non-GAAP) 576 515 12% 14% Gross Margin Rate (non-GAAP) 29.0% 25.9% Operating Expenses (non-GAAP) 279 282 (1)% —% % of Revenue 14.0% 14.2% Operating Income (non-GAAP) 297 2
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 Q2 2023 Q1 2023 Q2 2022 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 20 $ 9 $ 35 Transformation & Restructuring Costs (1) — 49 Acquisition-Related Amortization of Intangibles 43 42 45 Acquisition-Related Costs 1 — 3 Separation Costs 52 19 — Interest Expense 91 83 67 I
Slide 26: GAAP to Non-GAAP Reconciliation (LTM)
26 Q2 2023 LTM Q1 2023 LTM Q2 2022 LTM Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 91 $ 106 $ 78 Pension Mark-to-Market Adjustments 8 8 (118) Transformation & Restructuring Costs 46 96 127 Acquisition-Related Amortization of Intangibles 171 173 175 Acquisition-Related C
Slide 27: Adjusted EBITDA by Segment
27 Q2 2023 Q1 2023 Q2 2022 Retail $ 123 $ 97 $ 104 Hospitality 60 53 46 Digital Banking 53 49 56 Payments & Network 99 83 97 Self-Service Banking 169 138 142 Eliminations (9) (8) (8) Corporate and Other (106) (110) (98) Adjusted EBITDA $ 389 $ 302 $ 339 ADJUSTED EBITDA BY SEGMENT $ in millions
Slide 28: Q2 2023 GAAP to Non-GAAP Reconciliation
28 Q2 2023 QTD GAAP Transformation Costs Stock-based Compensation Acquisition- related amortization of intangibles Acquisition- related Costs Separation Costs Cyber ransomware incident recovery costs Q2 2023 QTD non-GAAP Product revenue $576 $— $— $— $— $— $— $576 Service revenue 1,410 — — — — — — 1
Slide 29: Q2 2023 EPS Reconciliation
29 Q2 2023 QTD Q2 2023 QTD non- GAAP Income (loss) from continuing operations attributable to NCR common stockholders: Income (loss) from continuing operations (attributable to NCR) $20 $142 Dividends on convertible preferred shares $(4) $— Income (loss) from continuing operations attributable to NC
Slide 30: Q2 2022 GAAP to Non-GAAP Reconciliation
30 Q2 2022 QTD GAAP Transformation Costs Stock-based Compensation Costs Acquisition- related amortization of intangibles Acquisition- related costs Russia Q2 2022 QTD non-GAAP Product revenue $614 $— $— $— $— $(5) $609 Service revenue 1,383 — — — — (1) 1,382 Total revenue 1,997 — — — — (6) 1,991 Cos
Slide 31: Q2 2022 EPS Reconciliation
31 Q2 2022 QTD GAAP Q2 2022 QTD non- GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $35 $137 Dividends on convertible preferred shares $(4) $— Income from continuing operations attributable to NCR common stockho
Slide 32: Adjusted Free Cash Flow Reconciliation
32 Q2 2023 Q1 2023 Q2 2022 Cash provided by operating activities $227 $317 $80 Less: Total capital expenditures $(121) $(83) $(94) Plus: Change in trade AR facility $43 $— $— Plus: Pension contributions $4 $4 $5 Plus: Restricted cash settlement activity $1 $(29) $9 Adjusted Free Cash Flow-Unrestrict
Slide 33: Reconciliation of Combined Segments: Revenue
33 REVENUE Q2 2023 Q1 2023 Q2 2022 Retail $576 $552 $562 Hospitality 235 223 238 Digital Banking 140 136 131 Subtotal $951 $911 $931 Payments & Network $333 $323 $332 Self-Service Banking 661 613 679 Eliminations(1) (13) (10) (12) Subtotal $981 $926 $999 Other 54 54 61 Other adjustment(2) — — 6 Tota
Slide 34: Reconciliation of Combined Segments: Recurring Revenue
34 RECURRING REVENUE Q2 2023 Q1 2023 Q2 2022 Retail $262 $253 $254 Hospitality 138 136 129 Digital Banking 125 122 117 Subtotal $525 $511 $500 Payments & Network $332 $321 $331 Self-Service Banking 381 369 355 Eliminations(1) (13) (10) (12) Subtotal $700 $680 $674 Other 37 38 43 Total NCR $1,262 $1,
Slide 35: Reconciliation of Combined Segments: Adjusted EBITDA
35 ADJUSTED EBITDA Q2 2023 Q1 2023 Q2 2022 Retail $123 $97 $104 Hospitality 60 53 46 Digital Banking 53 49 56 Subtotal $236 $199 $206 Payments & Network $99 $83 $97 Self-Service Banking 169 138 142 Eliminations(1) (9) (8) (8) Subtotal $259 $213 $231 Corporate & Other(2) (106) (110) (98) Total NCR $3
Slide 36: Reconciliation of Constant Currency: Revenue
36 Q2 2023 - REVENUE Revenue Growth % (GAAP) Favorable (Unfavorable) FX Impact Revenue Growth % Constant Currency (non-GAAP) Retail 2 % (1) % 3 % Hospitality (1) % — % (1) % Digital Banking 7 % — % 7 % SUBTOTAL 2 % (1) % 3 % Payments & Network — % (1) % 1 % Self-Service Banking (3) % (2) % (1) % Eli
Slide 37: Reconciliation of Constant Currency: Adjusted EBITDA
37 Q2 2023 - Adjusted EBITDA Adjusted EBITDA Growth % Favorable (Unfavorable) FX Impact Adjusted EBITDA Growth % Constant Currency (non-GAAP) Retail 18 % (3) % 21 % Hospitality 30 % — % 30 % Digital Banking (5) % — % (5) % SUBTOTAL 15 % (1) % 16 % Payments & Network 2 % (1) % 3 % Self-Service Bankin
Slide 38: Thank You
THANK YOU @NCcR