NCR Voyix Corp

The following results of operations present the continuing operations of NCR Voyix for the years ended December 31, 2024, 2023 and 2022. All results from Digital Banking and NCR Atleos are presented within income (loss) from discontinued operations for these periods.

Key Strategic Financial Metrics

The following tables show our key strategic financial metrics for the years ended December 31, the relative percentage that those amounts represent to total revenue, and the change in those amounts year-over-year.

Recurring revenue as a percentage of total revenue

(1)Recurring revenue includes all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, cloud revenue, payment processing revenue, and certain professional services arrangements as well as term-based software license arrangements that include customer termination rights.

Revenue by type

Revenue by geography

Net income (loss) from continuing operations attributable to NCR Voyix and Adjusted EBITDA(2)as a percentage of total revenue

(2)Refer to our definition of Adjusted EBITDA in the section entitled “Non-GAAP Financial Measures and Use of Certain Terms” below.

Non-GAAP Financial Measures and Use of Certain Terms:

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 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).

Our definitions and calculations of these non-GAAP measures may differ from similarly-titled measures reported by other companies and cannot, therefore, be compared with similarly-titled measures of other companies. These non-GAAP measures should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.

(1)During the three months ended September 30, 2023, it was determined that the transactions underlying the unrealized gains on terminated interest rate swap and cap agreements reported in Accumulated other comprehensive income were probable of not occurring under ASC 815, Derivatives and Hedging. As such, $18 million of unrealized gains were recognized in Interest expense. Refer to Note 15, “Derivatives and Hedging Instruments” in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Report.

(2)Represents professional fees, retention bonuses, and other costs incurred related to acquisitions, which are considered non-operational in nature.

(3)Represents integration, severance, and other exit and disposal costs, which are considered non-operational in nature.

(4)Represents costs incurred as a result of the Spin-Off. Professional fees to effect the Spin-Off including separation management, organizational design, and legal fees have been classified within discontinued operations through October 16, 2023, the separation date.

(5)Represents gains and losses recognized during the year due to changes in valuation of the Lebanese pound and the Egyptian pound.

(6)Represents company identified fraudulent ACH disbursements from a company bank account. Additional details regarding this item are discussed in Note 1, “Basis of Presentation and Significant Accounting Policies” in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Report.

(7) Represents expenses to respond to, remediate and investigate the April 13, 2023 cyber ransomware incident, net of insurance recoveries, which is considered a nonrecurring special item. Additional details regarding this cyber ransomware incident are discussed in Note 1, “Basis of Presentation and Significant Accounting Policies” in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Report.

(8)Represents professional fees related to strategic initiatives which are considered non-operational in nature, as well as certain costs incurred related to the Hardware Business transition.

Other Performance Metrics

Adjusted free cash flow-unrestricted and Conversion Rate. NCR Voyix management uses the non-GAAP measure called “adjusted free cash flow-unrestricted” to assess the financial performance of the Company. We define adjusted free cash flow-unrestricted as net cash provided by (used in) operating activities less capital expenditures for property, plant and equipment, less additions to capitalized software, plus/minus collections of previously sold trade receivables purchased from third parties, restricted cash settlement activity, NCR Atleos settlement activity, cash taxes paid for the Digital Banking Sale, cash activity related to environmental discontinued operations plus acquisition-related items, and plus pension contributions and settlements. NCR Atleos settlement activity relates to changes in amounts owed to and amounts due from NCR Atleos for activity related to items governed by the separation and distribution agreement. Activity from the commercial and transition services agreements are not included in this adjustment.

We believe adjusted free cash flow-unrestricted information is useful for investors because it relates the operating cash flows from the Company’s continuing and discontinued operations to the capital that is spent to continue and improve business operations. In particular, adjusted free cash flow-unrestricted indicates the amount of cash available after capital expenditures for, among other things, investments in the Company’s existing businesses, strategic acquisitions, and repayment of debt obligations. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures, since there may be other non-discretionary expenditures that are not deducted from the measure. Adjusted free cash flow-unrestricted does not have a uniform definitions under GAAP, and therefore the Company’s definition may differ from other companies’ definitions of this measure. These non-GAAP measures should not be considered a substitute for, or superior to, cash flows from operating activities under GAAP.

Refer to the section titled “Financial Condition, Liquidity and Capital Resources” in Part I, Item 7 of this Form 10-K for additional information.

Annualized Recurring Revenue (“ARR”). ARR is calculated using recurring revenue, excluding software licenses sold as a subscription, for the last three months times four, plus the rolling four quarters for term-based software license arrangements that include customer termination rights. The Company believes this metric may be useful to investors in evaluating the achievement of strategic goals related to the conversion of the Retail and Restaurant businesses to recurring revenue streams over time. ARR is an operating metric and does not necessarily reflect the pattern of revenue recognition in accordance with GAAP and should not be considered a substitute for GAAP revenue. ARR does not have a uniform definition and, therefore, the Company’s definitions may differ from other companies’ definitions of this measure.

Consolidated Results

The following table shows our results for the years December 31, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for product gross margin, service gross margin and total gross margin, which are divided by the related component of revenue.

Revenue

Product revenue includes our hardware and software license revenue streams. Service revenue includes hardware and software maintenance revenue, implementation services revenue, cloud revenue, payments processing revenue as well as professional services revenue.

Total revenue decreased 11% for the year ended December 31, 2024 compared to the year ended December 31, 2023. Product revenue decreased 26% due to a decline in SCO and POS hardware revenues, as well as a decrease in software license revenue for one-time revenue recognized in 2023. Service revenue decreased 3% due to a decrease in payment processing service revenue due to the divestiture at the end of 2023. The decline in service revenue was also related to revenue from non-recurring implementation services in 2023, slightly offset by an increase in hardware maintenance and professional services revenue.

Total revenue was flat for the year ended December 31, 2023 compared to the year ended December 31, 2022. Product revenue decreased 3% due to a decrease in SCO and POS hardware revenues partially offset by an increase in software license revenue. Service revenue increased 2% comparing the year ended 2023 to 2022 due primarily to growth in cloud services revenue, hardware maintenance revenue and recurring software related services.

Gross Margin

(1)The percentage of revenue is calculated for each line item divided by the related component of revenue.

Gross margin as a percentage of revenue was 20.5% in 2024 compared to 21.1% in 2023 due to a decline in gross margin related to payments processing services from the divestiture at the end of 2023, as well as the one-time software license revenue and non- recurring implementation service revenue recognized in 2023, as discussed above. Additionally, gross margin for the year ended December 31, 2024 included $46 million related to transformation and restructuring costs, $20 million of strategic initiative costs, $10 million of stock-based compensation expense, $14 million related to amortization of acquisition-related intangible assets, offset by $5 million of cyber ransomware incident recoveries. Gross margin for the year ended December 31, 2023 included $4 million related to transformation and restructuring costs, $15 million of stock-based compensation expense, $33 million related to amortization of acquisition-related intangible assets, $31 million in separation-related costs and $16 million in cyber ransomware recovery costs.

Gross margin as a percentage of revenue was 21.1% in 2023 compared to 21.6% in 2022. Gross margin for the year ended December 31, 2023 included $4 million related to transformation and restructuring costs, $15 million of stock-based compensation expense, $33 million related to amortization of acquisition-related intangible assets, $31 million in separation-related costs and $16 million in cyber ransomware recovery costs. Gross margin for the year ended December 31, 2022 included $28 million related to transformation and restructuring costs, $14 million of stock-based compensation expense and $36 million related to amortization of acquisition-related intangible assets.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses were $459 million in 2024 as compared to $659 million in 2023. As a percentage of revenue, selling, general and administrative expenses were 16.2% in 2024 and 20.7% in 2023. In 2024, selling, general and administrative expenses included $55 million of transformation and restructuring costs, $26 million of strategic initiative costs, $20 million of stock-based compensation expense, $14 million of acquisition-related amortization of intangibles and $8 million in separation-related costs, offset by $5 million in recoveries related to the fraudulent ACH matter and $8 million of cyber ransomware incident recoveries. In 2023, selling, general and administrative expenses included $21 million of transformation and restructuring costs, $113 million of stock-based compensation expense, $8 million of acquisition-related amortization of intangibles, $23 million in ACH disbursement costs, $1 million of acquisition-related costs, $54 million in separation-related costs and $2 million of costs related to the divestitures of certain non-strategic businesses. Excluding these items, selling, general and administrative expenses decreased from 2023 to 2024 due to cost mitigation actions implemented, including a reduction in employee-related costs.

Selling, general, and administrative expenses were $659 million in 2023, compared to $618 million in 2022. In 2023, selling, general and administrative expenses included $21 million of transformation and restructuring costs, $113 million of stock-based compensation expense, $8 million of acquisition-related amortization of intangibles, $23 million in fraudulent ACH disbursement costs, $1 million of acquisition-related cost, $54 million in separation-related costs and $2 million of costs related to the divestitures of certain non-strategic businesses. In 2022, selling, general and administrative expenses included $39 million of transformation and restructuring costs, $61 million of stock-based compensation expense, $4 million of acquisition-related amortization of intangibles and $2 million of acquisition-related costs. Excluding these items, selling, general and administrative expenses decreased from 2022 to 2023 related to cost actions implemented, partially offset by an increase in employee-related costs.

Research and Development Expenses

Research and development expenses were $157 million in 2024, compared to $139 million in 2023. As a percentage of revenue, these costs were 5.6% in 2024 and 4.4% in 2023. In 2024, research and development expenses included $7 million of costs related to our transformation and restructuring initiatives, $3 million of separation related costs and $10 million of stock-based compensation expense. In 2023, research and development expenses included $3 million of transformation and restructuring costs, $7 million of separation related costs, $12 million of stock-based compensation expense and $1 million in cyber ransomware recovery costs. Excluding these items, research and development expenses increased from 2023 to 2024 as the Company continues to invest in research and development activities related to our platform.

Research and development expenses were $139 million in 2023, compared to $116 million in 2022. In 2023, research and development expenses included $3 million of transformation and restructuring costs, $7 million of separation related costs, $12 million of stock-based compensation expense and $1 million in cyber ransomware recovery costs. In 2022, research and development expenses included $20 million of costs related to our transformation and restructuring initiatives and $9 million of stock-based compensation expense. Excluding these items, research and development expenses increased from 2022 to 2023 related to an increase in employee-related costs.

Gain (loss) on Extinguishment of Debt

The gain on extinguishment of debt of $8 million in 2024 is related to the redemption discount on the 5.250% senior notes due 2030 and the 5.125% senior notes due 2029 of $18 million, offset by the write-off of the related deferred financing fees of $10 million.

The loss on extinguishment of debt was $46 million in 2023 related to the premium paid for early redemption of $24 million of the 5.750% senior notes due 2027 and the 6.125% senior notes due 2029, as well as the write-off of deferred financing fees of $22 million related to the senior unsecured notes and the senior secured credit facilities.

Refer to Note 6, “Debt Obligations” of the Notes to Consolidated Financial Statements in Item 8 of Part II of this Report for additional discussion on the financing transactions.

Interest Expense

Interest expense was $134 million in 2024 compared to $294 million in 2023. Interest expense is primarily related to our senior unsecured notes and borrowings under the senior secured credit facilities. The decrease in interest expense was due to the decrease in total debt outstanding.

Interest expense was $294 million in 2023 compared to $285 million in 2022. Interest expense is primarily related to our senior unsecured notes and borrowings under the senior secured credit facilities. The increase in interest expense was due to the significant increase in variable interest rates on the senior secured credit facilities, partially offset by the recognition of $18 million of unrealized gains on terminated interest rate derivative contracts included in Accumulated other comprehensive loss due to the determination that the underlying transactions were no longer probable of occurring as a result of the Spin-Off of NCR Atleos from the Company.

Other Income (Expense), net

Other income (expense), net was expense of $36 million in 2024, expense of $76 million in 2023 and income of $18 million in 2022, with the components reflected in the following table:

Employee benefit plans within other income (expense) net includes the components of pension, postemployment expense, other than service cost, as well as actuarial gains and losses from the annual pension mark-to-market adjustment. In 2024, there was an actuarial gain of $12 million compared to an actuarial loss of $7 million in 2023. The net actuarial gain in 2024 was primarily due to plan experience gains as well as an increase in discount rates and favorable returns on plan assets. The actuarial loss in 2023 was primarily due to plan experience losses as well as a decrease in discount rates, partially offset by favorable returns on plan asset. The actuarial gain in 2022 was $41 million primarily due to an increase in discount rates, partially offset by unfavorable returns on the fair value of plan assets.

In 2023, Other, net includes a $9 million loss recognized on the divestitures of certain non-strategic businesses. In 2022, Other, net includes a $9 million loss recognized on the divestiture of a non-strategic business.

In 2024, the Company incurred bank-related fees of $24 million compared to $28 million and $9 million in 2023 and 2022, respectively. Higher costs were incurred in 2023 than 2022 related to higher interest rates on the trade receivables facility compared to prior years. The trade receivables facility was terminated during the third quarter of 2024.

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 2024. As of March 31, 2024, the operations of Lebanon and Egypt have transferred to NCR Atleos; however, the Company retained certain assets and liabilities under the separation and disclosure agreement which were impacted by the changes in foreign currency fluctuations.

Income Taxes

Our effective tax rate was (2)% in 2024, (34)% in 2023, and (16)% in 2022. During 2024, our tax rate was impacted by a $57 million expense from recording a valuation allowance against deferred tax assets. During 2023, our tax rate was impacted by a net $226 million expense related to the Spin-Off of NCR Atleos. Also during 2023, our tax rate was impacted by a $31 million expense from recording a valuation allowance against deferred tax assets and a $17 million expense from nondeductible executive compensation. During 2022, our tax rate was impacted by a $117 million expense from recording a valuation allowance against deferred tax assets in the United Kingdom and other jurisdictions.

While we are subject to numerous federal, state and foreign tax audits, 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 future periods. During 2025, the Company expects to resolve certain tax matters related to U.S. and foreign jurisdictions. These resolutions could have a material impact on the effective tax rate in 2025.

We regularly review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based on the evaluation of positive and negative evidence. This evidence includes historical taxable income/loss, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies.

Income (Loss) from Discontinued Operations, net of tax

In 2024, the income from discontinued operations was $1,160 million, net of tax, of which $1,178 million related to income from discontinued operations, net of tax, for the Digital Banking Sale, $8 million loss from discontinued operations, net of tax related to NCR Atleos, and a loss from discontinued operations, net of tax, of $10 million related to the Company’s environmental remediation matters.

In 2023, the income from discontinued operations was $306 million, net of tax, of which of which $115 million related to income from discontinued operations, net of tax, for the Digital Banking Sale, $241 million related to income from discontinued operations, net of tax, related to NCR Atleos, and a loss from discontinued operations, net of tax, of $50 million related to the Company’s environmental remediation matters.

In 2022, the income from discontinued operations was $428 million, net of tax, of which $138 million related to income from discontinued operations, net of tax, for the Digital Banking Sale, $294 million related to income from discontinued operations, net of tax, related to NCR Atleos, and a loss from discontinued operations, net of tax, of $4 million related to the Company’s environmental remediation matters.

Refer to Note 2, “Discontinued Operations” of the Notes to Consolidated Financial Statements in Item 8 of Part II of this Report for additional information.

Revenue and Adjusted EBITDA by Segment

The Company manages and reports its businesses in the following segments: Retail and Restaurants. Segments are measured for profitability by the Company’s chief operating decision maker based on revenue and segment Adjusted EBITDA. Refer to the section above entitled “Non-GAAP Financial Measures and Use of Certain Terms” for our definition of Adjusted EBITDA and the reconciliation of net income (loss) from continuing operations attributable to NCR Voyix (GAAP) to Adjusted EBITDA (non-GAAP).

Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to any of our two individual reportable segments along with certain non-strategic businesses that are considered immaterial operating segment(s) and certain countries expected to transfer to NCR Atleos subsequent to 2024, as well as commercial agreements with NCR Atleos.

The following table shows our segment revenue and Adjusted EBITDA for the years ended December 31, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.

(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.

Segment Revenue

For the year ended December 31, 2024 compared to the year ended December 31, 2023

Retail revenue decreased 10% for the year ended December 31, 2024 compared to the prior year period. The change in revenue compared to the prior year relates to declines in hardware revenue and one-time perpetual licenses and installation revenue offset by increases in hardware maintenance revenue and professional services revenue.

Restaurants revenue decreased 7% for the year ended December 31, 2024 compared to the prior year period driven by declines in one-time hardware and installation revenue, partially offset by an increase in software and services revenue, driven by platform conversions and payments processing growth.

For the operations grouped as Other, revenue decreased 61% for the year ended December 31, 2024 compared to the prior year period due to the divestiture of a non-strategic business and declines in revenues not attributable to a reportable segment.

For the year ended December 31, 2023 compared to the year ended December 31, 2022

Retail revenue was flat for the year ended December 31, 2023 compared to the prior year period. The change in revenue compared to the prior period includes increases in software license revenue and transaction services revenue, offset by declines in hardware revenue.

Restaurants revenue increased 3% for the year ended December 31, 2023 compared to the prior year period driven by an increase in software and services revenue, driven by connecting to the platform and payments processing growth, partially offset by declines in hardware revenue.

For the operations grouped as Other, revenue decreased 15% for the year ended December 31, 2023 compared to the prior year period due to the divestiture of a non-strategic business and declines in revenues not attributable to a reportable segment, offset by revenues from commercial agreements in 2023 with NCR Atleos following the Spin-Off.

Segment Adjusted EBITDA

For the year ended December 31, 2024 compared to the year ended December 31, 2023

Retail Adjusted EBITDA decreased 7% for the year ended December 31, 2024 compared to the prior year period. The decrease in Adjusted EBITDA compared to the prior year period is driven by the decrease in hardware revenue, one-time perpetual license revenue and one-time installation revenue recognized in 2023, partially offset by cost mitigation actions implemented in 2024.

Restaurants Adjusted EBITDA increased 27% for the year ended December 31, 2024 compared to the prior year period driven by favorable software and services revenue mix, along with cost mitigation actions around cost of goods and service delivery costs taken during 2024.

For the year ended December 31, 2023 compared to the year ended December 31, 2022

Retail Adjusted EBITDA increased 7% for the year ended December 31, 2023 compared to the prior year period. The increase in Adjusted EBITDA compared to the prior year period is driven by improved revenue mix from growth in software and services as well as operating efficiencies and productivity improvements.

Restaurants Adjusted EBITDA increased 23% for the year ended December 31, 2023 compared to the period year period driven by positive revenue mix and growth in services offsetting the impact of higher labor costs.