NCR Corporation (NYSE: NCR) reported financial results today for the full year and three months that ended December 31, 2022. Full-year and fourth-quarter results and other recent highlights include:  

• Delivered strong full-year and fourth-quarter 2022 results 

• Full-year revenue of $7.8 billion, up 10%; up 13% on a constant currency basis  

◦ Full-year recurring revenue of $4.8 billion, up 16% and up 20% on a constant currency basis • Full-year net income from continuing operations attributable to NCR of $64 million, down 34% ◦ Full year Adjusted EBITDA of $1,370 million, up 10% and up 16% on a constant currency basis • Full year GAAP diluted EPS from continuing operations of $0.34, down 41% 

◦ Full year Non-GAAP diluted EPS of $2.62, up 2% 

• Expect 2023 to be another strong year executing strategic initiatives, with improved profitability • Company continues to move forward with the previously announced plan to separate into two companies 

“Our fourth quarter results represented a good finish to a year where we executed extremely well even with the challenging macroeconomic environment throughout 2022,” said Michael Hayford, Chief Executive Officer. “We delivered solid financial performance, made progress on our strategy to NCR becoming a software-led as-a-service company with higher recurring revenue streams, and demonstrated our unwavering commitment to our customers with further increases in our customer satisfaction metrics. We enter 2023 with products winning in the market and  positive momentum.”  

Hayford continued, “We are making good progress on our plans to separate NCR into two public companies. We  continue to believe the separation will unlock significant value for our customers and stockholders.”  

In this release, we use certain non-GAAP measures, including presenting certain measures on a constant currency basis. These non-GAAP measures include “free cash flow,” “Adjusted EBITDA,” and others with the words “non GAAP” or "constant currency" in their titles. These non-GAAP measures are listed, described and reconciled to their most directly comparable GAAP measures under the heading “Non-GAAP Financial Measures” later in this release.

Full Year and Fourth Quarter 2022 Operating Results 

Effective January 1, 2022, the Company realigned its reportable segments to correspond with changes to its operating model, management structure and organizational responsibilities. Prior periods have been reclassified in order to  conform to current period presentation. 

Revenue 

Fourth quarter revenue of $2,009 million decreased 1% year over year. On a constant currency basis, fourth-quarter revenue was up 2% year over year. Full year revenue of $7,844 million increased 10% year over year. On a constant  currency basis, full-year revenue was up 13% year over year. The following tables show revenue for the fourth quarter  and full year: 

% Increase  

$ in millions Q4 2022 Q4 2021% Increase  (Decrease) 

(Decrease) Constant  Currency 

Retail $ 575 $ 608 (5) % (1) % Hospitality 239 231 3 % 5 % Digital Banking 139 133 5 % 5 % Payments & Network 319 295 8 % 11 % Self-Service Banking 691 707 (2) % 2 % Other 57 68 (16) % (14) % Eliminations (1) (11) (8) 38 % 38 % Total revenue $ 2,009 $ 2,034 (1) % 2 % 

Recurring revenue $ 1,223 $ 1,182 3 % 7 % Recurring revenue % 61 % 58 % 

% Increase  

$ in millions FY 2022 FY 2021% Increase  (Decrease) 

(Decrease) Constant  Currency 

Retail $ 2,258 $ 2,231 1 % 5 % Hospitality 926 849 9 % 10 % Digital Banking 543 513 6 % 6 % Payments & Network 1,286 675 91 % 96 % Self-Service Banking 2,621 2,617 — % 4 % Other 244 297 (18) % (14) % Eliminations (1) (43) (26) 65 % 65 % 

Total segment revenue $ 7,835 $ 7,156 9 % 13 % Other adjustment (2) 9 —  

Total revenue $ 7,844 $ 7,156 10 % 13 % 

Recurring revenue $ 4,841 $ 4,166 16 % 20 % Recurring revenue % 62 % 58 % 

(1) Eliminations include revenues from contracts with customers and the related costs that are reported in the Payments & Network segment as well as in the Retail  or Hospitality segments, including merchant acquiring services that are monetized via payments. 

(2) Other adjustment reflects the revenue attributable to the Company's operations in Russia for the twelve months ending December 31, 2022 that were excluded  from management's measure of revenue due to our announcement to suspend sales to Russia and anticipated orderly wind down of our operations in Russia.  The revenue attributable to Russian operations for the three and twelve months ending December 31, 2021 of $15 million and $48 million, respectively, is included in the respective segments. Refer to section entitled "Non-GAAP Financial Measures" for additional information.  

• Fourth quarter gross margin of $485 million decreased from $503 million in the prior year period. Gross  margin rate was 24.1%, compared to 24.7% in the prior period. Fourth quarter gross margin (non-GAAP) of  $520 million decreased from $549 million in the prior year period. Gross margin rate (non-GAAP) was  25.9%, compared to 27.0% in the prior period.  

• Fourth quarter income from operations of $166 million increased from $123 million in the prior year period.  Fourth quarter operating income (non-GAAP) of $232 million increased from $215 million in the prior year  period. 

• Fourth quarter net loss from continuing operations attributable to NCR of $7 million decreased from net  income from continuing operations attributable to NCR of $64 million in the prior year period. 

• Fourth quarter Adjusted EBITDA of $380 million increased from $353 million in the prior year period.  Foreign currency fluctuations had an unfavorable impact on the Adjusted EBITDA comparison of 6%.  Adjusted EBITDA margin rate was 18.9%, compared to 17.4% in the prior year period. 

• Fourth quarter cash provided by operating activities of $202 million decreased from cash provided by  operating activities of $270 million in the prior year period. Fourth quarter free cash flow was $202 million,  compared to free cash flow of $100 million in the prior year period. 

• Full year 2022 net income from continuing operations attributable to NCR of $64 million decreased from net  income from continuing operations attributable to NCR of $97 million in the prior year period. 

• Full year 2022 Adjusted EBITDA increased to $1,370 million from $1,244 million in the prior year period. 

• Full year 2022 cash provided by operating activities was $447 million compared to $1.08 billion in the prior  year period. Full year 2022 free cash flow was $164 million compared to $460 million in the prior year  period. 

2023 Outlook 

For the full year 2023, we are forecasting: 

• Revenue - $7.8 billion to $8.0 billion 

• Adjusted EBITDA - $1.45 billion to $1.55 billion 

• Non-GAAP diluted EPS(1) - $3.30 - $3.50 

• Non-GAAP diluted EPS (prior convention)(1) - $2.55 to $2.75 

• Free cash flow - $400 million to $500 million 

For the first quarter of 2023, we are forecasting: 

• Revenue - $1.8 billion to $1.9 billion 

• Adjusted EBITDA - approximately $300 million 

• Non-GAAP diluted EPS(1) - $0.55 - $0.60 

• Non-GAAP diluted EPS (prior convention)(1) - $0.35 to $0.40 

• Free cash flow - $100 million to $200 million 

(1) Our Non-GAAP diluted EPS calculation previously included stock-based compensation expense. Beginning in  2023, we will exclude the impact of stock-based compensation expense from our Non-GAAP diluted EPS calculation,  which in 2022 would have resulted in Non-GAAP diluted EPS of approximately $3.32. 

With respect to our Adjusted EBITDA, Free Cash Flow and non-GAAP diluted earnings per share guidance, we do  not provide a reconciliation of the respective GAAP measures because we are not able to predict with reasonable  certainty the reconciling items that may affect the GAAP net income from continuing operations, GAAP cash flow  from operating activities and GAAP diluted earnings per share from continuing operations without unreasonable  effort. The reconciling items are primarily the future impact of special tax items, capital structure transactions,  restructuring, pension mark-to-market transactions, acquisitions or divestitures, or other events. These reconciling  items are uncertain, depend on various factors and could significantly impact, either individually or in the aggregate,  the GAAP measures. Refer to the heading “Non-GAAP Financial Measures” for additional information regarding our  use of non-GAAP financial measures. 

 Separation Update 

On September 15, 2022, NCR announced a plan to separate into two independent, publicly traded companies – one  focused on digital commerce, the other on ATMs. The separation is intended to be structured in a tax-free manner.  The separation transaction will follow the satisfaction of customary conditions, including effectiveness of appropriate  filings with the U.S. Securities and Exchange Commission, and the completion of audited financial statements. The  current target is to complete the separation by the end of 2023. 

Should alternative options become available in the future that could deliver superior value to our shareholders than the  planned separation, such as a whole or partial company sale of NCR, the Board remains open to considering  alternative scenarios. 

2022 Fourth Quarter and Full Year Earnings Conference Call 

A conference call is scheduled for today at 4:30 p.m. Eastern Time to discuss the full year and fourth quarter 2022 results.  Access to the conference call and accompanying slides, as well as a replay of the call, are available on NCR's web site at  http://investor.ncr.com. Additionally, the live call can be accessed by dialing 888-820-9413 (United States/Canada Toll free) or 786-460-7169 (International Toll) and entering the participant passcode 4153583.