NCR Corporation reported financial results today for the three months ended June 30, 2023. Second quarter results and other recent highlights include:

• Revenue of $2.0 billion; Recurring revenue of $1.3 billion
• Net income from continuing operations attributable to NCR of $20 million
• Adjusted EBITDA of $389 million
• GAAP diluted EPS from continuing operations of $0.11; Non-GAAP diluted EPS of $0.94
• Net cash provided by operating activities of $227 million; Adjusted free cash flow-unrestricted of $154 million
• Company progressing toward separation into two public companies

“We delivered strong second-quarter results, marked by solid growth in recurring revenue, margin expansion and robust cash flow generation,” said Michael Hayford, Chief Executive Officer. “We have made significant progress preparing for the separation into two public companies, which we anticipate will occur in the fourth quarter, and are in a strong financial position and carrying positive momentum. Over the last three quarters, NCR generated cumulative adjusted free cash flow-unrestricted of over $550 million, enabling us to decrease financial leverage in preparation for the separation transaction.”

Mr. Hayford continued, “With the planned separation in sight, we will become two distinct and robust entities with market-leading positions, each with ample opportunities for long-term growth. NCR Voyix will leverage NCR’s industry-leading software for global retail, hospitality and digital banking technology platforms. NCR Atleos will enable customers to meet global demand for ATM access while leveraging new ATM transaction types, including digital currency solutions, to drive market growth. We believe the enhanced operating and financial flexibility will benefit both companies and will unlock substantial value for our customers and stockholders.”

On July 24, 2023, NCR announced the new names for the two companies that will form after its planned separation, expected in the fourth quarter of 2023. NCR Voyix will be the new name for our digital commerce business, which includes our Retail, Hospitality, and Digital Banking segments. The new name for the ATM business will be NCR Atleos, which includes our Self-Service Banking and Payments & Network segments as well as our telecommunications and technology business.

In this release, we use certain non-GAAP measures, including presenting certain measures on a constant currency basis. These non-GAAP measures include “Adjusted free cash flow-unrestricted,” “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.

Second Quarter 2023 Operating Results

Revenue

Second quarter revenue of $1,986 million decreased 1% year over year. On a constant currency basis, revenue growth was flat year over year. The following table shows revenue for the second quarter:

• Second quarter gross margin of $538 million increased from $471 million in the prior year period. Gross margin rate was 27.1%, compared to 23.6% in the prior period. Second quarter gross margin (non-GAAP) of $576 million increased from $515 million in the prior year period. Gross margin rate (non-GAAP) was 29.0%, compared to 25.9% in the prior period.
• Second quarter income from operations of $148 million increased from $103 million in the prior year period. Second quarter operating income (non-GAAP) of $297 million increased from $233 million in the prior year period.
• Second quarter net income from continuing operations attributable to NCR of $20 million decreased from net income from continuing operations attributable to NCR of $35 million in the prior year period.
• Second quarter Adjusted EBITDA of $389 million increased from $339 million in the prior year period. Foreign currency fluctuations had an unfavorable impact on the Adjusted EBITDA comparison of 2%. Adjusted EBITDA margin rate was 19.6%, compared to 17.0% in the prior year period.
• Second quarter cash provided by operating activities of $227 million increased from cash provided by operating activities of $80 million in the prior year period. Second quarter Adjusted free cash flow-unrestricted was $154 million, compared to break-even Adjusted free cash flow-unrestricted in the prior year period.

2023 Outlook

We are affirming our full year 2023 guidance communicated on February 7, 2023, with our strong first half pushing expectations to the higher end of the previously guided ranges. 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 - $3.30 - $3.50
• Adjusted free cash flow-unrestricted - $400 million to $500 million

With respect to our Adjusted EBITDA, Adjusted free cash flow-unrestricted 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. The current target is to complete the separation in the fourth quarter of 2023.

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

2023 Second Quarter Earnings Conference Call

A conference call is scheduled for today at 4:30 p.m. Eastern Time to discuss the second quarter 2023 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 9356480.