Slide 1: Q2 2022 Earnings Conference Call
1 Q2 2022 EARNINGS CONFERENCE CALL MICHAEL HAYFORD, CEO OWEN SULLIVAN, PRESIDENT & COO TIM OLIVER, CFO July 27, 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 23% CC Y/Y; Recurring revenue up 35% CC Adjusted EBITDA growth of 26% CC Y/Y Adjusted EBITDA margin 17.0%; Up 250 bps from Q1 '22 Managing supply chain challenges
Slide 5: Business Update
5 BUSINESS UPDATE Board-led strategic review is ongoing Outsourced Budapest manufacturing facility Retail - Gaining traction in NCR EmeraldTM Hospitality - Strong growth in payment sites Digital Banking – Winning in the market Payments - Solid year over year growth Self-Service Banking - Momentum in
Slide 6: Q2 2022 Financial Results
6 Adjusted EBITDA up 21% y/y as reported and up 26% CC Non-GAAP diluted EPS up 15% as reported and up 29% CC; FX impact $(0.07) Solid results given near-term investment in working capital Total Revenue/Recurring Adjusted EBITDA Non-GAAP Diluted EPS Free Cash Flow Revenue up 19% y/y as reported and u
Slide 7: Payments & Network
7 $ in millions PAYMENTS & NETWORK Revenue Adjusted EBITDA $54 Endpoints (in thousands) Transactions (in millions) ARR Up 25% y/y Flat y/y Up 535% y/y Key Metrics $299 18 $98 $19 572 573 $208 $1,320 103 124 $332 $97 532 $1,187129 95 $67 515% y/y 411% y/y
Slide 8: Digital Banking
8 $ in millions DIGITAL BANKING Revenue Adjusted EBITDA $129 Active Users ARR Down 5% y/y Up 2% y/y Key Metrics $136 $56$55 19.0M 18.1M $466 $477 $131 $56 18.1M $460 17.1M $420 Registered Users Down 2% y/y 26.2M 25.6M 25.3M 23.7M 2% y/y 2% y/y
Slide 9: Self-Service Banking
9 $ in millions, except units and percentages SELF-SERVICE BANKING Revenue Adjusted EBITDA $645 Software & Services Revenue Mix ATMaaS Units ARR Flat y/y Up 3% y/y Up 3% y/y Key Metrics $611 64% $112 $140 4,326 4,438 $1,366 $1,390 67% 72% $679 $142 4,454 $1,411 67% 328 $1,228 1% y/y 5% y/y
Slide 10: Retail
10 $ in millions, except platform lanes RETAIL Revenue Adjusted EBITDA Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 $0 $70 $140 SCO RevenuePlatform Lanes ARR Up 1% y/y Key Metrics Flat y/yUp 594% y/y $562 $546 $121 $67 5,146 35,700 $1,019 $1,021 $242 $273 $562 $104 $1,021 26,670 $277 $192 3,154 $897 (14)% y/y —% y
Slide 11: Hospitality
11 $ in millions, except site counts HOSPITALITY Revenue Adjusted EBITDA Platform Sites ARR Up 39% y/y Up 15% y/y Key Metrics $215 $211 $39 $41 20,204 26,171 $443 $486 $238 $46 $509 28,073 $413 18,269 Payments Sites Up 139% y/y 1,669 3,552 3,989 102 18% y/y 11% y/y
Slide 12: Free Cash Flow, Net Debt & EBITDA
12 Free Cash Flow Q2 2022 Q2 2021 Cash provided by operating activities $80 $155 Less: Total capital expenditures ($94) ($79) Plus: Restricted cash settlement activity $9 $6 Plus: Pension contributions $5 $5 Plus: Acquisition related items $— $55 Free Cash Flow $— $142 $ in millions FREE CASH FLOW,
Slide 13: Looking Forward
13 LOOKING FORWARD Continued transformation to a software-led as-a-service company Drive operational excellence Leverage software and payments platform to increase share of wallet Continue board-led strategic review process to unlock shareholder value
Slide 14: Supplementary Materials
14 SUPPLEMENTARY MATERIALS
Slide 15: Q2 2022 GAAP Results
15 Q2 2022 Q2 2021 % Change Revenue $1,997 $1,677 19% Gross Margin 471 456 3% Gross Margin Rate 23.6% 27.2% Operating Expenses 368 372 (1)% % of Revenue 18.4% 22.2% Operating Income 103 84 23% % of Revenue 5.2% 5.0% Interest and other expense, net (66) (62) 6% Income Tax Expense (Benefit) — 31 Effec
Slide 16: Q2 2022 Operational Results
16 Q2 2022 Q2 2021 % Change as Reported % Change Adjusted Constant Currency Revenue (non-GAAP) $1,991 $1,677 19% 22% Gross Margin (non-GAAP) 511 472 8% 12% Gross Margin Rate (non-GAAP) 25.7% 28.1% Operating Expenses (non-GAAP) 313 299 5% 6% % of Revenue 15.7% 17.8% Operating Income (non-GAAP) 198 17
Slide 17: Non-GAAP measure definitions
17 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 18: Net Debt and Adjusted EBITDA definitions
18 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 19: GAAP to Non-GAAP Reconciliation: Adjusted EBITDA
19 Q2 2022 Q1 2022 Q2 2021 Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 35 $ (33) $ (9) Transformation & Restructuring Costs 49 27 7 Acquisition-Related Amortization of Intangibles 45 41 23 Acquisition-Related Costs 3 5 56 Interest Expense 67 63 61 Interest Income (2) (1
Slide 20: GAAP to Non-GAAP Reconciliation: LTM Adjusted EBITDA
20 Q2 2022 LTM Q1 2022 LTM Q2 2021 LTM Net (Loss) Income from Continuing Operations Attributable to NCR (GAAP) $ 78 $ 34 $ (73) Pension Mark-to-Market Adjustments (118) (118) 34 Transformation & Restructuring Costs 127 85 236 Acquisition-Related Amortization of Intangibles 175 153 83 Acquisition-Rel
Slide 21: Adjusted EBITDA by Segment
21 Q2 2022 Q1 2022 Q2 2021 Payments & Network $ 97 $ 98 $ 19 Digital Banking 56 56 55 Self-Service Banking 142 112 140 Retail 104 67 121 Hospitality 46 41 39 Corporate and Other (98) (97) (89) Eliminations (8) (6) (4) Adjusted EBITDA $ 339 $ 271 $ 281 ADJUSTED EBITDA BY SEGMENT $ in millions
Slide 22: Q2 QTD 2022 GAAP to Non-GAAP
22 Q2 QTD 2022 GAAP Transform ation Costs Acquisition- related amortization of intangibles Acquisition- related costs Russia Q2 QTD 2022 non-GAAP Product revenue $614 $— $— $— $(5) $609 Service revenue 1,383 — — — (1) 1,382 Total revenue 1,997 — — — (6) 1,991 Cost of products 544 (5) (2) — (2) 535 C
Slide 23: Q2 2022 Diluted EPS Reconciliation
23 Q2 QTD 2022 GAAP Q2 QTD 2022 non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $35 $106 Dividends on convertible preferred shares $(4) $— Income from continuing operations attributable to NCR common stockhol
Slide 24: Q2 QTD 2021 GAAP to Non-GAAP
24 Q2 QTD 2021 GAAP Transformation Costs Acquisition- related amortization of intangibles Acquisition- related costs Tax Related Items Q2 QTD 2021 non- GAAP Product revenue $551 $— $— $— $— $551 Service revenue 1,126 — — — — 1,126 Total revenue 1,677 — — — — 1,677 Cost of products 453 — (2) — — 451
Slide 25: Q2 2021 Diluted EPS Reconciliation
25 Q2 QTD 2021 GAAP Q2 QTD 2021 non-GAAP Income from continuing operations attributable to NCR common stockholders: Income from continuing operations (attributable to NCR) $(9) $91 Dividends on convertible preferred shares (4) — Income from continuing operations attributable to NCR common stockholde
Slide 26: Free Cash Flow Reconciliation
26 Q2 2022 Q1 2022 Q2 2021 Cash provided by operating activities $80 $38 $155 Less: Total capital expenditures $(94) $(80) $(79) Plus: Pension contributions $5 $4 $5 Plus: Restricted Cash Settlement Activity $9 $28 $6 Plus: Acquisition Related Items $— $— $55 Free Cash Flow $— $(10) $142 $ in millio
Slide 27: Q2 2022 Operational Results Reconciliation
27 Q2 2022 Operational Results % Change as Reported Favorable (Unfavorable) FX Impact % Change Adjusted Constant Currency Revenue (non-GAAP) 19% (3)% 22% Gross Margin (non-GAAP) 8% (4)% 12% Operating Expenses (non-GAAP) 5% (1)% 6% Operating Income (non-GAAP) 14% (9)% 23% Interest and other expense (
Slide 28: Thank You
28 THANK YOU