NCR Atleos (NATL) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $1.08 billion, up 4% year-over-year on a constant currency basis, with recurring revenue comprising 73% of total revenue and strong growth in software and services.

• Adjusted EBITDA was $207 million with a 19.2% margin, expanding sequentially, and non-GAAP EPS was $0.89, both above expectations.

• Net income was $24 million, reversing a $58 million loss in Q3 2023.

• Free cash flow for Q3 was $38 million, with year-to-date free cash flow at $123 million.

• Strategic focus on expanding ATM as a Service and network utility banking, with strong customer demand and a growing backlog.

Financial highlights

• Q3 2024 recurring revenue was $790 million, up 8% year-over-year, and annual recurring revenue for ATM as a Service reached nearly $200 million.

• Self-Service Banking revenue grew 3% year-over-year to $677 million, with recurring revenue mix at 75%.

• Network segment revenue was $332 million, with deposit transactions up 218% year-over-year and ARPU at a high.

• Gross margin for Q3 2024 was 24.3%, down from 25.1% in Q3 2023.

• Net debt reduced by $76 million year-to-date, with a net leverage ratio dropping to 3.5x.

Outlook and guidance

• Full-year 2024 revenue guidance raised to $4.26–$4.34 billion, with adjusted EBITDA of $770–$800 million and non-GAAP EPS outlook increased to $2.90–$3.20.

• Adjusted free cash flow guidance for 2024 is $190–$220 million.

• Expecting 3–4% core business revenue growth and 8–10% EBITDA growth in 2025, with a higher EBITDA to free cash flow conversion rate (around 35%).

• Targeting net leverage below 3x by mid-2025, with potential for share repurchases once this is achieved.

• Ongoing separation-related costs are anticipated through at least fiscal year 2024.