NCR Voyix Corp
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
VYX$9.75-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0000070866-24-000025
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000070866-24-000031
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 117 previous paragraphs and 139 current paragraphs.
69 unchanged; 45 reworded; 20 added; 2 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 16 previous and 25 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Sale of Digital Banking Business
Current report
On August 6, 2024, the Company entered into a definitive agreement with an affiliate of The Veritas Capital Fund VIII, L.P. (the “Buyer”) pursuant to which the Buyer agreed to purchase the Company’s Digital Banking segment businesses (the “Digital Banking Sale”). The purchase price for the transaction consists of $2.45 billion in cash, subject to a post-closing adjustment, as well as contingent consideration of up to an additional $100 million in cash upon the achievement of a specified return on the Buyer's invested capital at the time of any future sale. The Digital Banking Sale represents the next step in the Company’s efforts to streamline its operations to focus specifically on its core software and services offerings for restaurants and retailers around the world. The Digital Banking Sale is expected to close by the end of fiscal year 2024, subject to receipt of necessary regulatory approvals and other customary closing conditions. Upon closing of the Digital Banking Sale, the Company expects to use the net proceeds primarily to reduce debt, including outstanding amounts under the term loan facility and Revolving Credit Facility, repurchases of certain senior unsecured notes, and termination of the trade receivables facility.
Current report
As a result of the Digital Banking Sale, we expect our Digital Banking segment to be presented as a discontinued operation in the third quarter of fiscal 2024. Following the closing of the Digital Banking Sale, the Company expects to manage and report its businesses in the following two reportable segments: Retail and Restaurants.
Current report
Transition of Hardware Business to ODM Model
Current report
On August 6, 2024, the Company announced its entry into a commercial agreement with Ennoconn Corporation (“Ennoconn”) to transition its self-checkout and point-of-sale hardware businesses to an outsourced design and manufacturing model, including the sale of certain assets relating to these businesses (the “Hardware Business Transition”). Under the terms of the agreement, Ennoconn will design, manufacture, warrant, supply and ship self-checkout and point-of sale hardware directly to the Company’s customers and the Company will sell hardware to its customer as a sales agent for Ennoconn and continue to provide its point-of sale and self-checkout software as well as key support and maintenance services.
Current report
The Hardware Business Transition is expected to be fully implemented by early 2025 and, as a result of the Hardware Business Transition, the Company expects to record commission revenue from point-of-sale and self-checkout hardware sales as an agent for Ennoconn on a net basis, excluding the costs paid to Ennoconn.
Current report
•Revenue of $876 million, down 7% compared to the prior year period
Current report
•Adjusted EBITDA of $144 million, down 14% compared to the prior year period
Current report
Out-of-period adjustments
Current report
In the first quarter of 2023, the Company recorded a $10 million out-of-period adjustment to increase operating expenses and an employee-related liability in order to correct for an understatement of such same balances during the fourth quarter of 2022.
Current report
In the second quarter of 2024, the Company recorded an out-of-period correction to decrease revenue by $10 million, decrease accounts receivable by $5 million, and increase contract liabilities by $5 million. The adjustment is not expected to be material to the full year results of operations for 2024.
Current report
During the second quarter of 2024, the Company recorded corrections related to the Spin-Off. As of December 31, 2023, total assets were understated by approximately $12 million, total liabilities were overstated by approximately $7 million, and total equity was understated by approximately $19 million. The Company evaluated the impact of these adjustments and concluded they were not material to any previously issued interim or annual consolidated financial statements.
Current report
Gross margin as a percentage of revenue inthe six months ended June 30, 2024 was 22.3% compared to 26.3% inthe six months ended June 30, 2023. Gross margin for the six months ended June 30, 2024 included $34 million of transformation and restructuring costs, $7 million of stock-based compensation expense and $9 million of amortization of acquisition-related intangible assets, offset by $5 million of net recoveries related to the cyber ransomware incident. Gross margin for the six months ended June 30, 2023 included $1 million of transformation and restructuring costs, $5 million of stock-based compensation expense, $21 million of amortization of acquisition-related intangible assets and $5 million of cyber ransomware incident recovery costs. Excluding these items, gross margin as a percentage of revenue decreased from 2023 to 2024 related to a decline in gross margin related to payments processing services due to the divestiture at the end of 2023.
Current report
Selling, general, and administrative expenses were $271 million compared to $322 million in the six months ended June 30, 2024 and 2023, respectively. As a percentage of revenue, selling, general and administrative expenses were 15.6% and 17.4% in the six months ended June 30, 2024 and 2023, respectively. In the six months ended June 30, 2024, selling, general and administrative expenses included $29 million of transformation and restructuring costs, $17 million of strategic initiative costs, $13 million of stock-based compensation expense, $20 million of amortization of acquisition-related intangible assets $4 million of separation-related costs, and $1 million of cyber ransomware incident recovery costs, offset by $2 million in net recoveries related to the ACH fraud disbursements matter. In the six months ended June 30, 2023, selling, general and administrative expenses included $11 million of transformation and restructuring costs, $5 million of fraudulent ACH disbursement costs, $41 million of stock-based compensation expense, $14 million of amortization of acquisition-related intangible assets, $1 million of acquisition-related costs, $8 million of separation-related costs and $6 million of cyber ransomware incident recovery costs. Excluding these items, selling, general and administrative expenses decreased as a percentage of revenue from 2023 to 2024 due to cost mitigation actions implemented in the six months ended June 30, 2024.
Current report
Research and development expenses were $115 million compared to $91 million in the six months ended June 30, 2024 and 2023, respectively. As a percentage of revenue, these costs were 6.6% and 4.9% in the six months ended June 30, 2024 and 2023, respectively. In the six months ended June 30, 2024, research and development expenses included included $4 million of transformation and restructuring costs, $7 million of stock-based compensation expense and $4 million of separation-related costs. In the six months ended June 30, 2023, research and development expenses included $4 million of stock-based compensation expense. After considering these items, research and development expenses increased as a percentage of revenue from 2023 to 2024 as the Company continues investing in research and development activities.
Current report
Income tax expense was $10 million for the six months ended June 30, 2024 compared to income tax expense of $12 million for the six months ended June 30, 2023. The change in tax expense was impacted by the mix of earnings between our US and non-US jurisdictions.
Current report
The Company is subject to numerous federal, state and foreign tax audits. While we believe that appropriate reserves exist for issues that might arise from these audits, should these audits be settled, the resulting tax effect could impact the tax provision and cash flows in 2024 or future periods.
Current report
The Company recognized income from discontinued operations, net of tax, of $147 million for the six months ended June 30, 2023, of which $148 million related to income from discontinued operations, net of tax, for NCR Atleos and $1 million of expense from discontinued operations, net of tax, related to the Company’s environmental remediation matters.
Current report
Retail Adjusted EBITDA decreased 24% and 13% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in Adjusted EBITDA for both periods is due to one-time software and services revenue recognized in the prior year.
Current report
Upon the closing of the Digital Banking Sale, the Company expects to use the net proceeds primarily to reduce debt, including outstanding amounts under the term loan facility and Revolving Credit Facility, repurchases of certain senior unsecured notes, and termination of the trade receivables facility.
Removed paragraphs (2)
Previous report
•Revenue of $862 million, down 6% compared to the prior year period
Previous report
•Adjusted EBITDA of $120 million, down 3% compared to the prior year period
Reworded paragraphs (45)
Previous wording
•Results of operations. This section contains an analysis of our results of operations presented in the accompanying condensed consolidated statements of income by comparing the results for the three months ended March 31, 2024 to the results for the three months ended March 31, 2023.
Current wording
•Results of operations. This section contains an analysis of our results of operations presented in the accompanying condensed consolidated statements of income by comparing the results for the three and six months ended June 30, 2024 to the results for the three and six months ended June 30, 2023.
Previous wording
On October 16, 2023, the Company completed the spin-off (“Spin-Off”) of its ATM-focused businesses, including the self-service banking, payments & network and telecommunications and technology businesses, into an independent, publicly traded company, NCR Atleos (“NCR Atleos”), on a tax-free basis. Accordingly, the historical financial results of NCR Atleos are reflected as discontinued operations in the Company’s consolidated financial statements. The 2023 presentation of discontinued operations has been updated to reflect the results of operations for the countries that transferred to NCR Atleos in the first quarter of 2024 and excludes the countries that have not yet transferred to NCR Atleos as of March 31, 2024. The results of operations for the countries that have not yet transferred will be presented as part of discontinued operations as of the date of their separation. As of December 31, 2023, there were seven countries that had not yet transferred to NCR Atleos. During the three months ended March 31, 2024, three of these delayed countries transferred to NCR Atleos, and one additional country transferred during April 2024. Refer to Note 2, “Discontinued Operations”, in the Notes to Consolidated Financial Statements in Item 1 of this Report, for additional information.
Current wording
On October 16, 2023, the Company completed the spin-off (“Spin-Off”) of its ATM-focused businesses, including the self-service banking, payments & network and telecommunications and technology businesses, into an independent, publicly traded company, NCR Atleos (“NCR Atleos”), on a tax-free basis. Accordingly, the historical financial results of NCR Atleos are reflected as discontinued operations in the Company’s consolidated financial statements. The 2023 presentation of discontinued operations has been updated to reflect the results of operations for the countries that transferred to NCR Atleos in the first quarter of 2024 and excludes the countries that have not yet transferred to NCR Atleos as of June 30, 2024. The results of operations for the countries that have not yet transferred will be presented as part of discontinued operations as of the date of their separation. As of December 31, 2023, there were seven countries that had not yet transferred to NCR Atleos. During the three months ended March 31, 2024, three of these delayed countries transferred to NCR Atleos, and during the three months ended June 30, 2024, two additional delayed countries transferred to NCR Atleos. Refer to Note 2, “Discontinued Operations”, in the Notes to Consolidated Financial Statements in Item 1 of this Report, for additional information.
Previous wording
•Digital Banking - Our Digital Banking segment serves financial institutions by delivering software solutions which enable a fully integrated digital experience for consumer and business customers across all channels. We serve banks and credit unions in the United States with our cloud-based software solutions including account opening, account management, transaction processing, imaging, and branch services, among others. We are unique in our ability to offer unified banking solutions across digital (application and browser), in-branch and via interactive teller machines (“ITMs”).
Current wording
•Digital Banking - Our Digital Banking segment serves financial institutions by delivering software solutions which enable a fully integrated digital experience for consumer and business customers across all channels. We serve banks and credit unions in the United States with our cloud-based software solutions including account opening, account management, transaction processing, imaging, and branch services, among others. We are unique in our ability to offer unified banking solutions across digital (application and browser), in-branch and via interactive teller machines (“ITMs”). See our discussion above under “—Sale of Digital Banking Business” for information regarding our expected segments following the Digital Banking Sale.
Previous wording
Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to any of our three individual reportable segments along with certain non-strategic businesses that are considered immaterial operating segment(s) and certain countries which are expected to transfer to NCR Atleos during 2024, as well as commercial agreements with NCR Atleos.
Current wording
Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to any of our three individual reportable segments along with certain non-strategic businesses that are considered immaterial operating segment(s) and certain countries which are expected to transfer to NCR Atleos during the remainder of 2024, as well as commercial agreements with NCR Atleos.
Previous wording
The following were significant themes and events for the first quarter of 2024.
Current wording
The following were significant themes and events for the second quarter of 2024.
Previous wording
◦Recurring revenue, increased 1% as compared to the prior year period and comprised 62% of total consolidated revenue
Current wording
◦Recurring revenue, increased 2% as compared to the prior year period and comprised 62% of total consolidated revenue
Previous wording
◦Software and services revenue, increased 2% as compared to the prior year period and comprised 77% of total consolidated revenue
Current wording
◦Software and services revenue, decreased 3% as compared to the prior year period and comprised 75% of total consolidated revenue
Previous wording
During the year ended December 31, 2023, we recognized $36 million related to this matter in Cost of services and Selling, general and administrative expenses. As of December 31, 2023, we received $5 million of cash and expected to receive an additional $14 million of these costs to be recovered under our insurance policies, which was recorded as an insurance receivable. During the three months ended March 31, 2024, the Company incurred $6 million of additional expenses related to the cyber ransomware incident. To date, we have recovered $8 million under our insurance policies. As of March 31, 2024, we expect to receive an additional $17 million which was recorded as an insurance receivable. We are still pursuing insurance recoveries for the remaining costs. We may incur additional costs relating to this incident in the future, including expenses to respond to this matter, payment of damages or other costs to customers or others. At this time we do not believe additional costs incurred as a result of the incident will ultimately have a material adverse effect on our business, results of operations or financial condition; however, we remain subject to risks and uncertainties as a result of the incident.
Current wording
As previously disclosed, on April 13, 2023 the Company determined that a single data center outage impacting certain of its commerce customers was caused by a cyber ransomware incident. Upon such determination, the Company immediately started contacting customers, enacted its cybersecurity protocol and engaged outside experts to contain the incident and begin the recovery process. We concluded that this incident impacted operations for some customers only with respect to specific Aloha cloud-based services and Counterpoint. Our investigation also concluded no financial reporting systems were impacted. As of June 30, 2024, the Company has incurred $44 million of expenses related to the cyber ransomware incident and has recovered $20 million under our insurance policies. As of June 30, 2024, we expect to receive an additional $5 million which was recorded as an insurance receivable. We are still pursuing insurance recoveries for the remaining costs. We may incur additional costs relating to this incident in the future, including expenses to respond to this matter, payment of damages or other costs to customers or others. At this time we do not believe additional costs incurred as a result of the incident will ultimately have a material adverse effect on our business, results of operations or financial condition; however, we remain subject to risks and uncertainties as a result of the incident.
Previous wording
In February 2024, the Company identified fraudulent automated clearing house “ACH” disbursements from a Company bank account. The cumulative amount of these disbursements total $34 million, and during the three months ended March 31, 2024, we recovered $12 million related to this matter. The Company continues to cooperate with law enforcement and its banks to attempt to recover additional amounts of the fraudulent transfers and to file insurance claims for the remainder. However, there can be no assurance that the Company will be successful in recovering additional amounts of the unauthorized ACH disbursements from the wrongdoers, the Company’s banks or the Company’s insurance providers. Although not materially impacting any previously reported periods, the misstatements resulted in the revision of interim periods in 2023.
Current wording
In February 2024, the Company identified fraudulent automated clearing house “ACH” disbursements from a Company bank account. The cumulative amount of these disbursements total $34 million, and during the six months ended June 30, 2024, we recovered $13 million related to this matter. The Company is pursuing insurance recoveries for the remainder; however, there can be no assurance that the Company will be successful in recovering additional amounts of the unauthorized ACH disbursements from the Company’s insurance providers. Although not materially impacting any previously reported periods, the misstatements resulted in the revision of interim periods in 2023.
Previous wording
As a leading technology company, we seek to maintain our market position by expanding our share of wallet among existing customers and attracting new customers, leveraging our cloud-based, platform-enabled software and services offerings. We believe there is considerable opportunity to grow with new and existing customers as retailers, restaurants and financial institutions are increasingly adopting technology and support services to enhance and transform their operations. As digital adoption becomes increasingly important for businesses and financial institutions to engage with their end-users, we are investing in innovation to attract and retain customers across our three segments. Our ability to create experiences that ultimately improve end-user satisfaction through a combination of innovation and service is a competitive strength of the Company. In order to provide long-term value to all our stakeholders, we set complementary business goals and financial strategies. Execution of these is driven by the following key pillars: (i) focus on our customers; (ii) leverage our brand (and global distribution); (iii) support customers through innovation; and (iv) allocate our capital strategically through a cost-disciplined approach to operations. We also plan to continue to improve our execution to drive solid returns and to transform our business to enhance value for all stockholders.
Current wording
As a leading technology company, we seek to maintain our market position by expanding our share of wallet among existing customers and attracting new customers, leveraging our cloud-based, platform-enabled software and services offerings. We believe there is considerable opportunity to grow with new and existing customers as retailers and restaurants are increasingly adopting technology and support services to enhance and transform their operations. As digital adoption becomes increasingly important for businesses to engage with their end-users, we are investing in innovation to attract and retain customers across our segments. Our ability to create experiences that ultimately improve end-user satisfaction through a combination of innovation and service is a competitive strength of the Company. In order to provide long-term value to all our stakeholders, we set complementary business goals and financial strategies. Execution of these is driven by the following key pillars: (i) focus on our customers; (ii) leverage our brand (and global distribution); (iii) support customers through innovation; and (iv) allocate our capital strategically through a cost-disciplined approach to operations. We also plan to continue to improve our execution to drive solid returns and to transform our business to enhance value for all stockholders.
Previous wording
The following tables show our results for the three months ended March 31, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.
Current wording
The following tables show our results for the three and six months ended June 30, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.
Previous wording
The following tables show our key strategic financial metrics for the three months ended March 31, the relative percentage that those amounts represent to total revenue, and the change in those amounts year-over-year.
Current wording
The following tables show our key strategic financial metrics for the three and six months ended June 30, the relative percentage that those amounts represent to total revenue, and the change in those amounts year-over-year.
Previous wording
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)Our management uses the non-GAAP measure Adjusted EBITDA because it provides useful information to investors as an indicator of strength and performance of the Company’s ongoing business operations, including funding discretionary spending such as capital expenditures, strategic acquisitions, and other investments. We determine Adjusted EBITDA based on GAAP net income (loss) from continuing operations attributable to NCR Voyix plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization (excluding acquisition-related amortization of intangibles); plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments and other special items, including amortization of acquisition-related intangibles, separation-related costs, cyber ransomware incident recovery costs, net of insurance recoveries, fraudulent ACH disbursements costs, net of recoveries, foreign currency devaluation, and transformation and restructuring charges (which includes integration, severance and other exit and disposal costs), among others. The special items are considered non-operational or non-recurring in nature, so are excluded from the Adjusted EBITDA metric utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income (loss) from continuing operations attributable to NCR Voyix. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by our management to make decisions regarding the segments and to assess our financial performance. Refer to the table below for the reconciliations of net income (loss) from continuing operations attributable to NCR Voyix (GAAP) to Adjusted EBITDA (non-GAAP).
Current wording
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)Our management uses the non-GAAP measure Adjusted EBITDA because it provides useful information to investors as an indicator of strength and performance of the Company’s ongoing business operations, including funding discretionary spending such as capital expenditures, strategic acquisitions, and other investments. We determine Adjusted EBITDA based on GAAP net income (loss) from continuing operations attributable to NCR Voyix plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization (excluding acquisition-related amortization of intangibles); plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments and other special items, including amortization of acquisition-related intangibles, acquisition-related costs, loss (gain) on disposal of businesses, separation-related costs, cyber ransomware incident recovery costs, net of insurance recoveries, fraudulent ACH disbursements costs, net of recoveries, foreign currency devaluation, transformation and restructuring charges (which includes integration, severance and other exit and disposal costs), and strategic initiative costs, among others. The special items are considered non-operational or non-recurring in nature, so are excluded from the Adjusted EBITDA metric utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income (loss) from continuing operations attributable to NCR Voyix. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by our management to make decisions regarding the segments and to assess our financial performance. Refer to the table below for the reconciliations of net income (loss) from continuing operations attributable to NCR Voyix (GAAP) to Adjusted EBITDA (non-GAAP).
Previous wording
(1)Represents integration, severance, and other exit and disposal costs, as well as professional fees related to strategic initiatives, which are considered non-operational in nature.
Current wording
(1)Represents integration, severance, and other exit and disposal costs which are considered non-operational in nature.
Previous wording
(2)Represents costs incurred as a result of the Spin-Off. Professional fees to effect the spin-off of NCR Atleos including separation management, organizational design, and legal fees have been classified within discontinued operations during the three months ended March 31, 2023.
Current wording
(2)Represents costs incurred as a result of the Spin-Off. Professional fees to effect the spin-off of NCR Atleos including separation management, organizational design, and legal fees have been classified within discontinued operations during the three and six months ended June 30, 2023.
Previous wording
Total revenue decreased 6% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Product revenue for the three months ended March 31, 2024 decreased 20% compared to the three months ended March 31, 2023 due to a decline in SCO and POS hardware revenues partially offset by an increase in software license revenue. Service revenue for the three months ended March 31, 2024 increased 1% compared to the three months ended March 31, 2023 due to growth in cloud services revenue, professional services revenue and hardware maintenance revenue, partially offset by declines in payments processing services revenue due to the divestitures at the end of 2023.
Current wording
Total revenue decreased 6% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Product revenue for the six months ended June 30, 2024 decreased 19% compared to the six months ended June 30, 2023 due to a decline in SCO and POS hardware revenues partially offset by an increase in software license revenue. Service revenue for the six months ended June 30, 2024 decreased 1% compared to the six months ended June 30, 2023 due to a decrease in payment processing services revenue due to the divestiture at the end of 2023.
Previous wording
Gross margin as a percentage of revenue inthe three months ended March 31, 2024 was 22.7% compared to 25.1% inthe three months ended March 31, 2023. Gross margin for the three months ended March 31, 2024 included $10 million of transformation and restructuring costs, $3 million of stock-based compensation expense and $4 million of amortization of acquisition-related intangible assets. Gross margin for the three months ended March 31, 2023 included $3 million of stock-based compensation expense and $10 million of amortization of acquisition-related intangible assets. Excluding these items, gross margin as a percentage of revenue decreased from 26.5% in 2023 to 24.7% in 2024 mainly related to a decline in gross margin related to payments processing services due to the divestitures at the end of 2023.
Current wording
Gross margin as a percentage of revenue inthe three months ended June 30, 2024 was 21.8% compared to 27.9% inthe three months ended June 30, 2023. Gross margin for the three months ended June 30, 2024 included $24 million of transformation and restructuring costs, $4 million of stock-based compensation expense and $5 million of amortization of acquisition-related intangible assets, offset by $5 million of net recoveries related to the cyber ransomware incident. Gross margin for the three months ended June 30, 2023 included $1 million of transformation and restructuring costs, $2 million of stock-based compensation expense, $11 million of amortization of acquisition-related intangible assets and $5 million of cyber ransomware incident recovery costs. Excluding these items, gross margin as a percentage of revenue decreased from 2023 to 2024 related to a decline in gross margin related to payments processing services due to the divestiture at the end of 2023.
Previous wording
Selling, general, and administrative expenses were $132 million in the three months ended March 31, 2024, compared to $155 million in the three months ended March 31, 2023. As a percentage of revenue, selling, general and administrative expenses were 15.3% in the three months ended March 31, 2024 compared to 16.9% in the same period of 2023. In the three months ended March 31, 2024, selling, general and administrative expenses included $18 million of transformation and restructuring costs, $7 million of stock-based compensation expense, $10 million of amortization of acquisition-related intangible assets and $1 million of separation-related costs, offset by $1 million in net recoveries related to the ACH fraud disbursements matter. In the three months ended March 31, 2023, selling, general and administrative expenses included $3 million of transformation and restructuring costs, $2 million of fraudulent ACH disbursement costs, $20 million of stock-based compensation expense, $7 million of amortization of acquisition-related intangible assets, and $2 million of separation-related costs. Excluding these items, selling, general and administrative expenses decreased as a percentage of revenue from 13.2% in 2023 to 11.3% in 2024 due to cost mitigation actions implemented during the three months ended March 31, 2024.
Current wording
Selling, general, and administrative expenses were $140 million in the three months ended June 30, 2024, compared to $167 million in the three months ended June 30, 2023. As a percentage of revenue, selling, general and administrative expenses were 16.0% in the three months ended June 30, 2024 compared to 17.7% in the same period of 2023. In the three months ended June 30, 2024, selling, general and administrative expenses included $15 million of transformation and restructuring costs, $13 million of strategic initiative costs, $6 million of stock-based compensation expense, $10 million of amortization of acquisition-related intangible assets, $3 million of separation-related costs, and $1 million of cyber ransomware incident recovery costs, offset by $1 million in net recoveries related to the ACH fraud disbursements matter. In the three months ended June 30, 2023, selling, general and administrative expenses included $8 million of transformation and restructuring costs, $3 million of fraudulent ACH disbursement costs, $21 million of stock-based compensation expense, $7 million of amortization of acquisition-related intangible assets, $1 million of acquisition-related costs, $6 million of separation-related costs and $6 million of cyber ransomware incident recovery costs. Excluding these items, selling, general and administrative expenses decreased as a percentage of revenue from 2023 to 2024 due to cost mitigation actions implemented in the three months ended June 30, 2024.
Previous wording
Research and development expenses were $60 million in the three months ended March 31, 2024, compared to $49 million in the three months ended March 31, 2023. As a percentage of revenue, research and development costs were 7.0% and 5.3% in the three months ended March 31, 2024 and 2023, respectively. In the three months ended March 31, 2024, research and development costs included $2 million of transformation and restructuring costs, $3 million of stock-based compensation expense and $4 million of separation-related costs. In the three months ended March 31, 2023, research and development expenses included $2 million of stock-based compensation expense. Excluding these items, research and development expenses increased as a percentage of revenue from 5.1% in 2023 to 5.9% in 2024 as the Company continues investing in research and development activities.
Current wording
Research and development expenses were $55 million in the three months ended June 30, 2024, compared to $42 million in the three months ended June 30, 2023. As a percentage of revenue, research and development costs were 6.3% and 4.4% in the three months ended June 30, 2024 and 2023, respectively. In the three months ended June 30, 2024, research and development costs included $2 million of transformation and restructuring costs and $4 million of stock-based compensation expense. In the three months ended June 30, 2023, research and development expenses included $2 million of stock-based compensation expense. Excluding these items, research and development expenses increased as a percentage of revenue from 2023 to 2024 as the Company continues investing in research and development activities.
Previous wording
Interest expense was $39 million compared to $83 million in the three months ended March 31, 2024 and 2023, respectively. Interest expense is primarily related to our senior unsecured notes and borrowings under the Senior Secured Credit Facility. The decrease in interest expense was due to the decrease in total debt outstanding.
Current wording
Interest expense was $41 million compared to $91 million for the three months ended June 30, 2024 and 2023, respectively. Interest expense is primarily related to our senior unsecured notes and borrowings under the Senior Secured Credit Facility. The decrease in interest expense was due to the decrease in total debt outstanding.
Previous wording
Other income (expense), net was expense of $20 million and $4 million in the three months ended March 31, 2024 and 2023, respectively, with the components reflected in the following table:
Current wording
Other income (expense), net was expense of $5 million and $8 million for the three months ended June 30, 2024 and 2023, respectively, and expense of $25 million and $12 million for the six months ended June 30, 2024 and 2023, respectively, with the components reflected in the following table:
Previous wording
Foreign currency fluctuations and foreign exchange contracts within Other income (expense), net, includes a net loss of $15 million due to the impact of changes in the Lebanese pound and the Egyptian pound during the three months ended March 31, 2024. As of March 31, 2024, the operations of Lebanon and Egypt have transferred to NCR Atleos; however, we retained certain assets and liabilities under the separation and disclosure agreement which were impacted by the changes in foreign currency fluctuations.
Current wording
Foreign currency fluctuations and foreign exchange contracts within Other income (expense), net, includes a net loss of $15 million due to the impact of changes in the Lebanese pound and the Egyptian pound during the six months ended June 30, 2024. As of March 31, 2024, the operations of Lebanon and Egypt have transferred to NCR Atleos; however, we retained certain assets and liabilities under the separation and disclosure agreement which were impacted by the changes in foreign currency fluctuations.
Previous wording
Income tax provisions for interim (quarterly) periods are based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual items. Income tax benefit from continuing operations was $14 million for the three months ended March 31, 2024 compared to income tax expense of $5 million for the three months ended March 31, 2023. The change was primarily driven by a favorable mix of earnings between our U.S. and non-U.S. jurisdictions in the three months ended March 31, 2024 compared to the prior year. Additionally, the Company did not recognize any material discrete tax expenses or benefits in either period.
Current wording
Income tax provisions for interim (quarterly) periods are based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual items. Income tax expense from continuing operations was $24 million for the three months ended June 30, 2024 compared to income tax expense of $7 million for the three months ended June 30, 2023. The change was primarily driven by an unfavorable mix of earnings between our US and non-US jurisdictions in the three months ended June 30, 2024 compared to the prior year. Additionally, the Company recognized higher discrete tax expenses in the three months ended June 30, 2024.
Previous wording
The Company did not recognize a gain or loss from discontinued operations, net of tax, during the three months ended March 31, 2024.
Current wording
The Company recognized income from discontinued operations, net of tax, of $1 million for the three months ended June 30, 2024 related to NCR Atleos. The Company did not recognize a gain or loss from discontinued operations, net of tax, during the six months ended June 30, 2024.
Previous wording
The Company recognized income from discontinued operations, net of tax, of $74 million in the three months ended March 31, 2023 related to income from discontinued operations, net of tax, for NCR Atleos. Refer to Note 2, “Discontinued Operations”, of the Notes to Condensed Consolidated Financial Statements, for additional information.
Current wording
The Company recognized income from discontinued operations, net of tax, of $67 million for the three months ended June 30, 2023, of which $68 million related to income from discontinued operations, net of tax, for NCR Atleos and $1 million of expense from discontinued operations, net of tax, related to the Company’s environmental remediation matters.
Previous wording
Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to any of our three individual reportable segments along with certain non-strategic businesses that are considered immaterial operating segment(s), certain countries which are expected to transfer to NCR Atleos during 2024, and commercial agreements with NCR Atleos.
Current wording
Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to any of our three individual reportable segments along with certain non-strategic businesses that are considered immaterial operating segment(s), certain countries which are expected to transfer to NCR Atleos during the remainder of 2024, and commercial agreements with NCR Atleos.
Previous wording
The following tables show our segment revenue and Adjusted EBITDA for the three months ended March 31, the relative percentage that those amounts represent to segment revenue, and the change in those amounts year-over-year.
Current wording
The following tables show our segment revenue and Adjusted EBITDA for the three and six months ended June 30, the relative percentage that those amounts represent to segment revenue, and the change in those amounts year-over-year.
Previous wording
Retail revenue decreased 7% for the three months ended March 31, 2024 compared to the prior year period. For the three months ended March 31, 2024, the decrease in revenue is due to a decrease in hardware revenue partially offset by an increase in software and services revenue, mainly for software licenses and professional services revenues.
Current wording
Retail revenue decreased 7% for both the three and six months ended June 30, 2024, respectively, compared to the prior year periods. For the three months ended June 30, 2024, the decrease in revenue is due to a decrease in hardware revenue, as well as a decrease in one-time software and services revenue as compared to the prior year period. For the six months ended June 30, 2024, the decrease in revenue is due to a decrease in hardware revenue, as well as a decrease in one-time services revenue, primarily transaction services revenue, partially offset by an increase in software-related revenue.
Previous wording
Restaurants revenue decreased 4% for the three months ended March 31, 2024 compared to the prior year period. For the three months ended March 31, 2024, the decrease in revenue is due to a decrease in hardware revenue partially offset by an increase in software and services revenue, mainly for payment processing services and software license revenues.
Current wording
Restaurants revenue decreased 10% and 7% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods. For the three and six months ended June 30, 2024, the decrease in revenue is due to a decrease in hardware revenue, offset by an increase in software-related revenue, primarily payment processing services revenues.
Previous wording
Digital Banking revenue increased 7% for the three months ended March 31, 2024, compared to the prior year periods, due to an increase in recurring cloud services, professional services and software license revenues.
Current wording
Digital Banking revenue increased 9% and 8% for the three and six months ended June 30, 2024, compared to the prior year periods, due to an increase in recurring cloud services revenue, software maintenance revenue and software license revenue.
Previous wording
Retail and Restaurants Adjusted EBITDA increased 4% and 25% for the three months ended March 31, 2024, respectively, compared to the prior year period. Software and services revenue increased as a percentage of total revenue, from 62% and 73% in the three months ended March 31, 2023 to 70% and 77% in the three months ended March 31, 2024 for Retail and Restaurants, respectively. This increase in favorable software and services revenue mix, along with cost mitigation actions around cost of goods and service delivery costs taken during the quarter caused an increase in overall EBITDA performance for each segment.
Current wording
Restaurants Adjusted EBITDA increased 22% and 23% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods. This increase is due to favorable software and services revenue mix, along with cost mitigation actions around cost of goods and service delivery costs taken during the year.
Previous wording
Digital Banking Adjusted EBITDA increased 10% for the three months ended March 31, 2024 compared to the prior year period due to the revenue growth described above.
Current wording
Digital Banking Adjusted EBITDA increased 17% and 14% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods due to the revenue growth described above.
Previous wording
As of March 31, 2024, our cash and cash equivalents totaled $246 million and our total debt was $2.7 billion. Our borrowing capacity under our senior secured credit facility was $282 million as of March 31, 2024. Our ability to generate positive cash flows from operations is dependent on general economic conditions, and the competitive environment in our industry, and is subject to business and other risk factors, including as detailed in our filings with the SEC. If we are unable to generate sufficient cash flows from operations, or otherwise comply with the terms of our credit facilities, we may be required to seek additional financing alternatives.
Current wording
As of June 30, 2024, our cash and cash equivalents totaled $204 million and our total debt was $2.6 billion. Our borrowing capacity under our senior secured credit facility was $342 million as of June 30, 2024. Our ability to generate positive cash flows from operations is dependent on general economic conditions, and the competitive environment in our industry, and is subject to business and other risk factors, including as detailed in our filings with the SEC. If we are unable to generate sufficient cash flows from operations, or otherwise comply with the terms of our credit facilities, we may be required to seek additional financing alternatives.
Previous wording
The following table summarizes our cash flows from operating activities, investing activities and financing activities for the three months ended March 31, 2023 and 2024:
Current wording
The following table summarizes our cash flows from operating activities, investing activities and financing activities for the six months ended June 30, 2024 and 2023:
Previous wording
Net cash used in operating activities of discontinued operations related to environmental obligations were zero and $6 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Net cash provided by or used in operating activities of discontinued operations related to environmental obligations was cash provided by operating activities of $3 million and cash used in operating activities $6 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Operating Activities Cash used in operating activities was $35 million in the three months ended March 31, 2024 compared to cash provided by operating activities of $311 million in the three months ended March 31, 2023. The decrease in cash provided by operating activities was driven by the net loss in the three months ended March 31, 2024 and movement in the net working capital accounts, as well as employee related payments.
Current wording
Operating Activities Cash provided by operating activities was $27 million in the six months ended June 30, 2024 compared to cash provided by operating activities of $538 million in the six months ended June 30, 2023. The decrease in cash provided by operating activities was driven by the net loss in the six months ended June 30, 2024 and movement in the net working capital accounts, as well as employee related payments in 2024.
Previous wording
Capital Expenditures and Other Investing Activities Our principal capital expenditures are for software (purchased and internally developed) and additions to property and equipment. We invested approximately $61 million and $83 million in capital expenditures during the three months ended March 31, 2024 and 2023, respectively. We expect to continue investing in property and equipment, purchased software and internally developed software to support our business.
Current wording
Capital Expenditures and Other Investing Activities Our principal capital expenditures are for software (purchased and internally developed) and additions to property and equipment. We invested approximately $125 million and $204 million in capital expenditures during the six months ended June 30, 2024 and 2023, respectively. We expect to continue investing in property and equipment, purchased software and internally developed software to support our business. During the six months ended June 30, 2024, the Company disposed of certain corporate-owned life insurance policies and received proceeds of $30 million.
Previous wording
The table below reconciles net cash provided by operating activities to NCR Voyix’s non-GAAP measure of adjusted free cash flow-unrestricted for the three months ended March 31:
Current wording
The table below reconciles net cash provided by operating activities to NCR Voyix’s non-GAAP measure of adjusted free cash flow-unrestricted for the six months ended June 30, 2024:
Previous wording
(1)Adjusted free cash flow-unrestricted for the three months ended March 31, 2023 is not meaningful for comparison purposes given the presentation of cash flows due to the Spin-Off of NCR Atleos.
Current wording
(1)Adjusted free cash flow-unrestricted for the six months ended June 30, 2023 is not meaningful for comparison purposes given the presentation of cash flows due to the Spin-Off of NCR Atleos.
Previous wording
Long Term Borrowings The senior secured credit facilities include a term loan facility in an initial aggregate principal amount of $200 million, of which $196 million was outstanding as of March 31, 2024. Additionally, the senior secured credit facilities include a five-year Revolving Credit Facility with an aggregate principal amount of $500 million, of which $196 million was outstanding as of March 31, 2024. The Revolving Credit Facility also contains a sub-facility to be used for letters of credit, and as of March 31, 2024, there were $22 million letters of credit outstanding.
Current wording
Long Term Borrowings The senior secured credit facilities include a term loan facility in an initial aggregate principal amount of $200 million, of which $192 million was outstanding as of June 30, 2024. Additionally, the senior secured credit facilities include a five-year Revolving Credit Facility with an aggregate principal amount of $500 million, of which $136 million was outstanding as of June 30, 2024. The Revolving Credit Facility also contains a sub-facility to be used for letters of credit, and as of June 30, 2024, there were $22 million letters of credit outstanding.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
(6)Represents professional fees related to strategic initiatives which are considered non-operational in nature.
Current report — wording carried from elsewhere
Total revenue decreased 7% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Product revenue for the three months ended June 30, 2024 decreased 18% compared to the three months ended June 30, 2023 due to a decline in SCO and POS hardware revenues and a decrease in software license revenues. Service revenue for the three months ended June 30, 2024 decreased 2% compared to the three months ended June 30, 2023 due to a decrease in payment processing services revenue due to the divestiture at the end of 2023.
Current report — wording carried from elsewhere
Interest expense was $80 million compared to $174 million for the six months ended June 30, 2024 and 2023, respectively. Interest expense is primarily related to our senior unsecured notes and borrowings under the Senior Secured Credit Facility. The decrease in interest expense was due to the decrease in total debt outstanding.
Current report — wording carried from elsewhere
Refer to Note 2, “Discontinued Operations” of the Notes to Condensed Consolidated Financial Statements, for additional information.
Current report — wording carried from elsewhere
(1) The percentage of revenue is calculated for each line item divided by total revenue, except for Adjusted EBITDA, which are divided by the related component of revenue.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
As previously disclosed, on April 13, 2023 the Company determined that a single data center outage impacting certain of its commerce customers was caused by a cyber ransomware incident. Upon such determination, the Company immediately started contacting customers, enacted its cybersecurity protocol and engaged outside experts to contain the incident and begin the recovery process. We concluded that this incident impacted operations for some customers only with respect to specific Aloha cloud-based services and Counterpoint. Our investigation also concluded no financial reporting systems were impacted.