NCR Atleos Earnings Call Highlights Growth and Challenges

NCR Atleos, LLC ((NATL)) has held its Q4 earnings call. Read on for the main highlights of the call.

NCR Atleos, LLC’s recent earnings call painted a picture of robust financial performance and strategic growth, particularly emphasizing advancements in the ATM as a Service and Network segments. Despite facing challenges such as low investor engagement, international market hurdles, and the impact of rising interest rates on the Network segment, the company’s positive achievements and optimistic outlook suggest a promising trajectory for future growth.

Strong Financial Performance in 2024

Atleos reported impressive financial results for 2024, with revenues surpassing $4.3 billion, adjusted EPS reaching $3.22, and adjusted free cash flow exceeding $242 million. These figures were in line with or above the company’s financial targets, underscoring a strong fiscal year.

Significant Margin Expansion

The company achieved a notable margin expansion of 400 basis points year-over-year, driven by cost productivity initiatives and a favorable revenue mix. This margin growth reflects Atleos’ strategic efforts to enhance profitability.

ATM as a Service Growth

ATM as a Service emerged as a key growth driver, contributing one full point to the top-line growth for the year. The segment saw a remarkable 27% revenue increase, with an ARR exceeding $20 million and expectations to grow over 40% in 2025.

Network Segment Performance

The Network segment demonstrated strong performance, with high single-digit transaction growth and increasing ARPU each quarter. The fourth quarter marked a new high, highlighting the segment’s robust contribution to Atleos’ overall success.

Free Cash Flow Exceeds Expectations

Atleos generated $242 million in free cash flow, surpassing the guidance of approximately $205 million. This achievement reflects the company’s effective cash management and operational efficiency.

Equity Investor Engagement

Despite the strong financial performance, Atleos faces challenges with low equity investor engagement and daily trading volumes. The company remains undervalued compared to its peers, indicating potential for increased investor interest.

Challenges in International Markets

The international market experienced a 2% decline in transaction volumes, primarily due to challenging prior year comparisons, notably affecting the Asda U.K. launch.

Impact of Rising Interest Rates

The expiration of hedges on vault cash is expected to increase costs, impacting the Network segment’s EBITDA margin in 2025, posing a challenge for Atleos in managing rising interest rates.

Voyix Related Segment Decline

The Voyix-related segment is projected to decline, with revenue expected between $40-45 million and EBITDA around $5 million, indicating a need for strategic adjustments in this area.

Forward-Looking Guidance

Looking ahead to 2025, NCR Atleos anticipates core revenue growth of 3% to 6% on a constant currency basis, with total company revenue rising by 1% to 3%. Adjusted EBITDA is projected to increase by 7% to 10%, despite a 1% FX headwind. EPS is expected to grow significantly by 21% to 27%, reaching between $3.9 and $4.1. Free cash flow is forecasted to range from $260 million to $300 million, and the company aims to reduce net leverage to 3.2x by year-end. Strategic priorities include focusing on high-margin service revenue, enhancing service culture, and simplifying operations, with ATM as a Service revenue projected to grow over 40%.

In conclusion, NCR Atleos, LLC’s earnings call reflects a strong financial performance and strategic growth initiatives, particularly in the ATM as a Service and Network segments. While challenges such as low investor engagement and international market hurdles persist, the company’s forward-looking guidance and strategic priorities position it well for continued success in 2025.