NCR Voyix Corporation (VYX) Earnings Call Transcript & Summary

Hello, everyone. On behalf of the entire NCR management team, I want to welcome you to NCR's 2020 Investor Day. My name is Michael Nelson, and I'm the Vice President of Investor Relations and Treasurer at NCR. Before we begin, I want to cover a few housekeeping items. The run time for today's event will be approximately 2.5 hours. We'll have a little under 2 hours of prepared remarks, and then we'll provide a phone number where you could dial-in and ask questions. You can also submit your questions through the course of today's event through the Q&A box, be sure to include your name and company name. You'll notice all of today's presenters are wearing wrist bands, in preparation for today's event, we created an NCR bubble, and we've all been tested negative for COVID. We have a full agenda today with presentations from each member of our C-suite, the general managers for each of our industries as well as from several of our functional leaders. We will provide a comprehensive update of our business and our strategy and why we believe NCR is a compelling investment opportunity. We will be providing a lot of forward-looking statements, which are intended to help investors understand our growth strategy. These statements reflect our current expectations and beliefs, but they're subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in our periodic filings with the SEC, including our annual report. Today, we'll also be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials of our Investor Relations page on our website. A replay of the presentation will be available on our website, ncr.com. With that, before turning it over to Mike Hayford, NCR's President and CEO, we'll have a short video that highlights some of our customers. [Presentation]

Welcome to NCR. It's a beautiful day here, Thursday in Midtown, Atlanta. We would have loved to have you all here in person, but we have a great, great show ready for you today virtually. So we've got the whole management team here to share our progress at NCR and share our plans going forward. That little clip you just saw before I came on was a segment of all the clients we have literally in walking distance of Midtown -- our Midtown headquarters. So you saw banks like BofA, you saw banks like Wells, you saw banks like SunTrust or Truist now, BB&T. You saw banks like P&C. You saw retailers like Publix across the street. You saw retailers like Whole Foods. You saw restaurants like Varsity, which is right down the street or Ecco. You saw McDonald's, you saw Wendy, you saw Burger King. Those are all clients of NCR. You don't think about it because we sell the businesses, but as a consumer, you see NCR literally almost every day as you go about your business of going to a store, going to a restaurant or going to a bank. I always start with customers. I start with customers because as a company, that's where I started when I joined 2 years ago. We said we're going to put our customers first. We're going to focus on our customers. We're going to make sure our customers are satisfied with NCR, are happy with the services that NCR provides. We feel strongly that if we provide better service, better quality products than our competitors, our customers will buy more from NCR, and it's working. In 2019, we grew 8%, 10% constant currency over 2018. We had a very successful 2019. So we started off great '18 to '19, 2020 was a great start, but what drives that success with our clients? It's 36,000 employees, 36,000 professionals at NCR that, each and every day, go out and deliver to those clients. And so for us, it's very important that they treat every customer engagement as if that customer is the only customer we have. So whether you're a single -- store single restaurant or you're a chain of literally thousands around the globe, we treat you as if you're our only customer. Our employees -- and how we do that, how we change our company and how we've been changing the last couple of years, changing -- literally changing 136-year-old company, changing the culture to focus on customers, changing the culture to focus on our employees, and how do we get out and do that. So I got a little clip here to show you. I'm going to head upstairs and join Owen and Tim, but while I do that, here's a little clip talking about changing the culture, starting with our customers, starting with our employees and then adding innovation and products to make that all happen. I'll see you upstairs. [Presentation]

All right. I made it back up, Owen and Tim. I know that was a great clip to show a little bit about the change in culture at NCR, starting with our customers and then taking care of our employees. You saw Mike and Owen traveling, literally traveling the globe, and I think we met 35,000 people personally. And then a little product innovation. Tim Vanderham, our CTO, you're going to see him later this morning, but Tim over at Georgia Tech, doing the Hackathon with students and with our employees, how do we innovate on products. So that was a great little clip to kind of start our show today. We spoke almost 2 years ago now at our last Investor Day, and we laid out a strategy. We laid out a strategy for where we're going to take the company. We said we're going to shift NCR to be a software and services company. We're going to shift our revenue model to be recurring revenue, predictable revenue, subscription revenue, SaaS revenue or recurring revenue that we can book each and every year. And then lastly, we're going to improve our EBITDA margin. So we call that a 80/60/20%. We're going to come back and recap this at the end when Tim talks through the numbers, but 80% software and services revenue, 60% recurring revenue and 20% EBITDA margin. Those are our goals over the next 4 years. 2019, we had great success. We had -- over 2018, we fixed some of the manufacturing issues we had in 2018. We went out and fixed digital banking. We stopped losing customers, we started adding customers in 2019. Doug Brown's going to share a little bit about that later this morning. We improved customer SAT, and we moved our company forward. And in 2019, we had 10% growth. So we grew 10% over 2018 last year. Our EBITDA growth was 11%. We expanded margin. So we had great success heading into 2020. 2020 started really strong. And then we had COVID hit us just like a lot of others. And then more importantly, COVID hit our clients, COVID hit restaurants, COVID hit retailers, and COVID hit -- started to hit some of the banks with some of their capital spending. So we've had some issues on our financials in 2020 that you've seen in second and third quarter results. But in 2020, we continue to invest in our strategic products. We continue to make forward progress with our customer SAT. We continue to improve Aloha. We continue to improve digital banking, we have rolled out a next-gen cloud-based product in retail. So we've made a tremendous amount of progress in 2020, even though it doesn't show up in our financials today that we've reported. So today, what we need to do is give you a little bit more transparency into that progress so that you can see and be as excited as Tim, Owen, the whole team that we have here today, on the progress that we've made. So we're going to share that with you, but I think most importantly, we're going to give you a sense that if you look at the sum of the parts of NCR, you take the components of NCR, and I'm going to walk through that this morning, and you're going to hear about that throughout the day, and you value NCR by each of the sum of the parts, the overall value of NCR is greater than maybe the market thinks we should be -- we're trading at in today's market. So we think we have greater value than some of the parts. My job -- Tim, Owen, our whole job today is to make sure you walk away after this morning and feel the same. Our vision is to be the provider of choice to run the store, to run the restaurant or to run self-directed banking. We're in 3 business segments today: banking, retail and Hospitality. And underneath those business segments, you can see on this chart, that we've got some subsegments. I'm trying to provide this to you so you can see some of the subcomponents and build a -- sum of the parts model around the various portions of NCR. So if you look at this, and you look at the various components. So under Hospitality, we're in the restaurant. In the restaurant space, we're the #1 provider of enterprise POS software in the U.S. In retail, we're the #1 provider of enterprise point-of-sale software around the globe to the stores, literally around the globe. We're the #1 provider of self-checkout worldwide. We're the #1 provider of ATM sales of -- full-service ATM machines for the last 2 years. And in digital banking, we believe we're one of, if not, the largest provider of digital banking services to banks and credit unions in the U.S. And then we also talk about payments in the retail in the restaurant space. We're going to try to attach a payment to literally every transaction that we initiate with our point-of-sale software. I'm going to spend a little bit of time in each of the segments, walk through them. And then Owen is going to sit down with the business unit heads and have them give you a little bit more detail. So I'm going to go first to the self-directed banking. So again, we want to have the banking technology that helps you run your self-directed banking. In this area, we have 2 major -- 2 components. The first I'm going to talk about is digital banking. So in digital banking, it's an approximately $500 million business, $500 million a year business for us today in digital banking, and we have over 24 million users in digital banking. Again, we believe that we're one of the largest, if not the largest, in the industry. We know we're bigger than Q2 when it comes to rev and number of users. We know we're bigger than Alkami, we know bigger than Kony. We think we're bigger than any of the core providers like an FIS, Pfizer or Jack Henry have in this space. So we're a very large scale. And we actually -- you're going to see when Tim goes to the numbers, we make money at digital banking. We've reinvigorated that business over the last 2 years. We brought a new leader, Doug Brown, you're going to hear from him later. Doug came in, invested in digital banking, opened up the APIs, added Smart Business banking and really reinvigorated that business model. We got back to growth in 2020. So 2020 and beyond, we're going to be growing in digital banking. And then in the other part of our banking business, we have about $900 million of ATM sales. And again, we've been the ship share leader for the last 2 years. That's the hardware component, but then we also have about $1.7 billion of hardware -- sorry, of software and services that sometimes is associated with the ATMs, but many times is just sold totally independent. You're going to hear about a deal we had when we sold to a bank. The software layer that runs over all their different ATM providers, so our boxes as well as the other boxes. And that deal was purely a software-and-sales deal for that large regional bank in the U.S. So that part of the business, the software and sales have been transitioning -- software and services have been transitioning to a recurring model over the last couple of years. It's a very solid, stable business. We expect that to grow. It will grow with or without growth in the ATM business. So the ATM business, we expect to be relatively flat over the next 5 years. We're probably a bit more conservative than the industry is predicting, but we think that's going to be a solid business with the growth coming in software and services at $1.7 billion. And then clearly, digital banking being a growth leader. Solutions that run the store in our retail business, 2 pieces: Self-checkout. Self-checkout has taken off with COVID, whether you're a grocery store or a big box store, convenience store, everybody wants to put in self-checkout. So we believe that business is going to continue to grow. We're the largest provider in the world of self-checkout technology, the software and the hardware to do self-checkout. That is predicted to grow. Our RBR stats say, 8% to 10% unit growth every year. So CAGR of 8% to 10% unit growth in the next 5 years. We're going to participate in that and lead that growth in that business. David Wilkinson is going to get up and share a little bit more about that later, but that's going to be a growth engine for our company with the growth in self-checkout. And then the other component is the enterprise POS. And enterprise POS, it's the software that runs your store. So wall-to-wall running and operating your store, it's a transaction engine that runs your store. We've seen all the changes, again, with COVID that have driven order at home. Owen has even learned how to order his groceries from his Instacart app and have them delivered to his house. Go pick up at a drive-thru, curbside pickup at a big box electronic store, whatever it may be, we see all that as consumers behind the scenes, the technology that you need that runs your store, the enterprise or the ERP software that runs your store that we provide to over 1.5 million lanes around the globe. Those kind of technologies have to be upgraded to support all the new front-end systems. So we've developed a new system, cloud-based, open API platform-based system in the grocery side, it's called Emerald. That's out, it's in GA. It's up and running, and we're having great success. Our plan is to take those 1.5 million lanes, convert them onto that platform, which is a subscription-based business. We figured out a model. We know it's very important to do this low risk, risk free to the grocer, to the retailer, so they can do the migration. We've put a model in place that allows you to convert with lower risk in as little as 6 months, which is about 1/3 as much time as it typically takes to convert. So we've got that model in place. We're out there competing and winning against the likes of a GK Software or Lightspeed. We have the scale and scope many times over versus those smaller providers. So we believe we will participate as this whole business, the enterprise POS business for retailers goes through an upgrade cycle over the next 5 years. And then on to the restaurant, run the restaurant wall-to-wall, whether it's an enterprise restaurant or whether it's an SMB restaurant, we have the technology with Aloha to run your restaurant wall-to-wall. We spent the last couple of years investing in that product. We've got the cloud-based version of Aloha up in the marketplace and running today. We've improved our service model. We've improved, and in many cases, invested in our go-to-market model for how we go out and sell and install and deliver and support. And then we've created a suite of products called Aloha Essentials where we bundle up all the software, all the hardware, all the services, all the support, and we attach payments to go into the market and sell to the restaurants. In the enterprise space, we compete with Oracle MICROS. We're beating Oracle MICROS. We compete with PAR Brink. We're competing and beating of PAR Brink, size and scale in terms of our installed base and our capacity to grow is much greater. And then in the SMB space, it's competitors like Toast that we see out in that market. Our new product, our Aloha Essentials is out winning against Toast. It's out winning against TouchBistro. So we've taken that product, we've reinvested, and we're going to make the switch in 2020 and then 2021, where it's going to go back to growth. So 2021, our restaurant business is going to go back to growth. It's going to get back to growth by winning more accounts, it's going to get back to growth by adding more capability, more share of wallet in the accounts that we have. It's going to get back to growth really owning those enterprise accounts and growing on top of the business that we already have. Dirk Izzo is going to give you some more details about that later, but we're going to get our restaurant business back to growth in 2021. The team -- so the team, you're going to see most of the team members' faces. This is the team we put in place 2 years ago, and it's the same team that we've been operating with. You're going to get to interact with a number of the team members today. Owen's going to walk through -- Owen's going to act as MC today, walk through the business units and what each business line is doing, and then walk through the delivery units as well. So again, the team we put in place in 2018 and -- continues to operate today. And then I'm just going to spend a little time on ESG. So obviously, the social aspect of ESG 2020 has been a pretty active year. We, like everybody else, have been impacted by some of the social change, the social injustice, some of the racial activities here in the U.S. We've done a number of things. I've taken the lead on in our organization on DEI, diversity, equality and inclusion. Deb's joined me on that. We put somebody literally in charge of that. Sirita Donaldson's driving on a day-to-day basis. So we've really stepped up to focus on the social aspect. On the governance, we've added 4 new Directors since the last time that we met. We've actually created a new committee, a risk committee of the Board. That risk committee has responsibility for ESG. So that the things that we do that Mike does, that Owen does, that Tim does while we're here, carry on past the time that we're here. So we've asked the Board to actively participate in ESG. And then the environmental side. The building, you saw, the lobby when we started just a few minutes ago. But this building is the first building in the entire Southeast to get double platinum LEED certification. So we're very conscious of the environment and what we can do with our buildings, with our plans to be very focused on the environment. So the agenda for today, Owen's going to take us through -- as I said, he's going to operate as the master of ceremonies, literally for the bulk of the session around our business units. So he's going to have a group session with the business unit leads, the segment leads, Frank Hauck running banking. Shawn's going to come up and help him and Doug, 2 of his -- members of his team. In retail, David Wilkinson's going to share more detail on our retail product set; and then Hospitality, Dirk Izzo. And then Owen's also going to do a roundtable with the functional leads. So talking about what we do with our lean factory with our hardware manufacturing, with our service delivery. Adrian Button's going to join Owen on stage for that. Tim Vanderham, who's our CTO, drives all of our software. He's going to talk about how we've become a software-driven company over the last 2 years. And then Mithu Bhargava, our Head of Professional Services. So Owen's going to have a roundtable with the 3 of them. Tim is going to then close. And Tim's got a simple goal, how do we get the 80/60/20? How do the numbers lay out? It's not a hockey stick that's going to get us there. It's incremental improvement every year. So he's going to give you the numbers. He's going to give you some subsegment information around the sum of the parts that I just outlined there. We've asked Frank Martire to do -- say a few words today, our Executive Chairman of the NCR Board. And then we're going to leave about 30 to 40 minutes for Q&A at the end of the session today. So with that, I'm going to turn it over to Owen. As I said, he's going to operate as a master of ceremonies, kind of what he does every day. He takes care of all -- he does all the work, takes care of all the day-to-day. So he's going to do that with our business unit teams as well as our functional team. So with that, Owen, it's your stage. I think you're going to go actually to stage -- side stage and join the team. So we'll just have you hop over there and join that team. Have a great morning. And again, at the end, we'll give you a chance to jump in with some questions, and we'll have answers for you. Thanks for joining us.

Mike, thanks so much. Good morning, and welcome to everyone. I really appreciate you all joining us today. I'm here with 3 of the general managers who we'll introduce in just a second, but as you picked up from Mike, the enthusiasm for the strategy that we've embarked on and are looking forward to continuing executing is something that we are all energized about. It's taken some work to get to this point. If I think back to 2018, as many of us arrived at NCR. What we saw were some real evident challenges to executing the strategy that we now have in place. We had issues from our hardware and our software delivery and quality standards. We were being challenged with our go-to-market strategy, and if I think about the organization structure that we had in -- put in place, and I was going to use the word imposed on our markets and our customers, it really did not serve its purpose. We were a very siloed organization back in 2018. Each business had its own P&L, which really drove a siloed approach. And whether it was hardware, software, professional services. Each of those businesses stood alone and stood facing out to the market. And what we did not have was a cohesive strategy on how we should approach markets, we didn't have a cohesive strategy on how to make money, and we didn't have a cohesive strategy, most importantly, on how to take care of our customers. And the depiction in this slide is we put the customer out there on an island and said, you need to figure out how to interface to us. And what that led to was a high level of dissatisfaction. And as I said, the confusion in the marketplace as to who we are, what we were trying to deliver to the market, what we were trying to deliver in terms of investment into our company. So we really felt we needed to make a fundamental shift. And the fundamental shift that we made was started with the organization structure. And we moved to a general management-driven model, driven through 3 industry groups: the banking, retail and Hospitality segments. And what we did is we aligned the responsibility of market definition, market prioritization, the product offerings that we needed to compete and win in the marketplace, the go-to-market strategy with the GMs. And behind them are the delivery teams. And as I mentioned, you'll hear from some of those leaders shortly in a roundtable that we'll do, but what we really ask the general managers to do is to understand the markets, understand the opportunities that are available to us, assess where we are from a competitive standpoint, make sure that they have a plan to fill the gaps and make sure that we're in a position to go-to-market and win. And I think the combination of responsibility put on the general managers and the willingness of our delivery team to really step up and address the gaps that we had in terms of quality performance has really allowed us to get to this point and execute on the strategy that Mike's outlined. So excited to share with you what each of the GMs has to offer. And as I said we'll talk to the folks on the roundtable on the delivery side. But I want to start with Frank Hauck, who is our President of the Banking Business. Frank, when I think about where we have evolved from, the expectation of we sell ATMs and that seems to be it. I think internally, we've totally flipped that on its head when we think about digital banking and the software business that we're out delivering and how we're driving a recurring revenue. And yes, ATMs will always be a calling card, but it's not what's driving our growth. And I'd love to hear how you've positioned that, and how you're thinking about the growth of the banking business going forward?

Thanks, Owen. Yes. It's definitely exciting times at NCR. We look at our banking business, really in 2 unique parts: our ATM-centric business and our digital banking business. Part of the reason why we want to share it this way is because banks are navigating sort of where they are. And NCR enters the market, really, with the leadership position in the number of ATMs that we ship, the number of softwares that are attached to ATMs and the number of multi-vendor software applications that we have out there. And as banks are navigating their time during the pandemic, we continue to see strong market uptick in ATMs, including our ITMs, which are interactive teller machines. Banks are evaluating the footprint of each of their branches around the globe, but adversely, every single one have said that ATMs remain a critical component of their self-directed retail banking strategy. The interesting piece is that for every ATM that we sell, we sell software that's surrounded in services that really drive a long-term revenue stream. Industry analysts predict that the ATM business will be relatively flat through 2025, with transactions up slightly. We believe that banks will continue to make strategic investments with the software that really drive a unique and compelling customer experience. Our unattached software has had an amazing year, which is sold independent of an ATM. And these include things like multi-vendor ATM solutions, enterprise monitoring, transaction processing, branch transformation software, security applications. We had some amazing wins in places like P&C and TCF, but these are recurring revenue streams that now NCR sells in addition to the ATM business. Additionally, we're looking differently at our ATM business, moving it more to an as-a-service model. We believe that, that subscription area, which will cover software, services, hardware and then other things that banks do to service their banking clients, will be a key piece of this market going forward. In our digital banking business, we're really proud about what we've built. We've got roughly 24 million users, 650 customers around the globe. We've got a new channel services platform, which allow people to essentially have the same infrastructure go for teller transactions, ITM transactions, teller transactions call center, leveraging that same infrastructure going forward. U.S. bank rolled it out. It's in over 2,000 branches, and the money that they've saved has been really remarkable. I'd like to introduce Shawn Phillips, who is leading our ATM as-a-service business to tell you more about this exciting opportunity.

Thanks, Frank. As Mike mentioned earlier this morning, ATM-as-a-service represents an opportunity for NCR to transition a portion of our ATM hardware business to a subscription base. If you think about it, we can combine our experience of over 50 years in ATM business to ramp a portfolio of services and software to run the complete ATM channel for an FI. Now when the FI's think about IT outsourcing, they think about reducing complexity, reducing risk and finding a single point of accountability, and that's NCR. We also have the opportunity to shift our mindset from selling pieces and parts to that of an outcome. And so the question becomes one of, how do FIs decide who they want to partner with? So we went to our most recent customer, Fremont Bank in Fremont, California and said why NCR is the partner of choice for ATM-as-a-service? Fremont was very clear. They said to us, when ATM security mattered, we chose NCR. When ATM availability mattered, we chose NCR. When ATM compliance mattered, we chose NCR. When ATM innovation mattered, we chose NCR. So as partner of choice, we transitioned from vendor-selling pieces and parts to an outcome-based strategic partner. And we shift to that, the reward is tremendous for NCR. We now earn the ability to demand a larger portion of that customer's wallet share for accepting that outcome-based focus. Five years ago, NCR did not have the structure, as Owen shared, to be able to focus and deliver on the outcome, but now that we're structured and have the executive support, and the leadership to be able to provide this outcome. We can now demand it in the market and be the leader in this space. And customers are responding with adopting this share or this type of consumption of the ATM model. We also have the opportunity to shift to focus not just on the economics, but on the nature of this relationship. By having a strategic partner relationship, we now have the opportunity to cross-sell and upsell as we continue to grow our ATM portfolio. Thanks, Frank.

Thank you, Shawn. And now I'd like to have Doug Brown, who runs our Digital Banking business, tell us more about that Digital Banking business. Doug?

Thanks, Frank. I'm Doug Brown, the Head of Digital Banking here at NCR, and I've been in this role since the fourth quarter of 2018, and I'm really proud today to share with you some insights about NCR Digital Banking leadership in the market today overall and our posture for growth going forward. Let me go into some details about the actual leadership position which we retain, starting with our top line performance with over $500 million of annual revenue. We are, by far and away, the largest provider of digital banking in the industry today. It's built on a base of over 24 million digital users. That represents a 12% year-over-year growth performance. And it includes both consumer as well as business end users of the platform. And that user-based community is really driven by over 650 client institutions that span and range from very large banks such as Synovus and First Horizon and most recently, Wintrust, to community and main Street banks such as [indiscernible] First Community Bank in Texas and leading credit unions such as a Allegacy, SAFE and Pioneer. We're really proud of the full spectrum of market we service today with our platform. And all these financial performance metrics are really supported by great customer metrics mute the middle column, you'll see that our mobile apps, for example, score an average 4.8 star rating out of 5 stars in both the Apple App store and Google Play. That's really phenomenal performance and signals how happy and delighted end user customers are with our NCR digital technology. In addition, we're really proud that 3 of our banks and credit unions were named as top mobile providers most recently by MagnifyMoney's 2020 survey of over 300 financial institutions. We're really servicing and providing to the best of the best. And in addition, we're a leader in processing mobile check application for remote deposit. So we're servicing the largest of large institutions there as well as the entire base of our community and credit union banks. And then looking forward, we're really excited about the expansion of our solution footprint in digital and digitizing the branch experience. Today, we're now live at over 2,250 branches across North America, where we're using digital engagement in the branch environment to expedite servicing and make it a delightful customer experience, and we're really proud that industry-leading analysts such as IDC and Celent, have called us out as having the best of and best solution. This is what really positions us, on a go-forward basis, for very strong growth. So when we look at NCR Digital Banking, what really drives and gives us that confidence in the go-forward model? Well, first, we're built on superior customer experience, app store ratings and client delight is something that we're maniacal about, we're going to continue to be. Secondly, we're very proud of innovation where we bring new product capabilities to market through our digital first strategy and really build a platform model that allows for the integration of other new capabilities from fintech communities or even developed by our customers. We really like to do co-innovation together with our market industry and client partners. Thirdly, we're the highest return on investment platform because of the flexibility and capabilities we deliver to our clients today. And lastly, what is really important element of success is the bank and credit union domain expertise, which the team has in delivering to market today and something that is uniquely advantaged to NCR and gives us the confidence for the growth on a go-forward basis. With that, I'll turn it back to Frank.

Thanks, Doug. Now I'd like to leave you with 2 key points: first, as Shawn shared, we are leveraging our recognized brand in the ATM business, our global reach and our services scale by really surrounding the ATM with recurring software and services revenue and shifting the ATM business to an as-a-service model, which gives us a great runway for the future. Second, our Digital Banking business is large and getting larger. With 24 million users who give us great usability scores, our focus around leadership around new focus of innovations and new functionality, it's clearly the #1 priority that banks got right now. So we're in the right place at the right time with the right company. And with that, let me turn it back over to you, Owen.

Great. Thanks, Frank. I think it's so exciting to see what the assets available to us and to our customers look like when we think about what our bank customers are trying to do in satisfying their end-user and trying to provide service and deliver it with convenience and in a manner that really services them. And when you look at Digital Banking, when you look at what we're doing with the ATM and the software around it, we're really helping them get to their strategy of deploying a self-service bank. So great work on everyone's part. Thanks. Next up, David Wilkinson, who is President of our retail business, is going to talk about what he's seeing in the marketplace. And again, what we -- where we find ourselves is in a great leadership position, whether we look at it from the traditional hardware side of the house. Again, I would suggest we've kind of put that in its position, which is a great calling card, but the ability to leverage our position as the leader in point-of-sale enterprise software and what that means to our strategy in our marketplace. So why don't you share a few thoughts there?

Yes. Perfect. Thanks, Owen. It's an exciting time, as Frank said, to be here at NCR. I'm really excited to be part of the retail business for a couple of reasons: one is, it's an exciting time for the retail industry and technology. Traditionally, retail has under-invested in store technology. And now we're starting to see them spend to get ahead of the transition and consumer behavior that we're seeing with the acceleration with COVID. The second reason I'm excited is because NCR has done a great job of investing in the platform and the technology that's going to move retail forward. Let me tell you a little bit about our retail business. We're -- the retail business that we have today is -- our point-of-sale business is the core to everything that a retailer does to run the store. So think about all the consumer data, the transactions, inventory, payments, online ordering, all of that flows through our core, it becomes the central part, the fundamental IT enabler to what's happening in the enterprise. The other side of what of our business is really around self-checkout. And when I think about self-checkout, it's a growing business. The industry analysts believe that it's going to grow at 8% to 10%, and we think that our business will continue to grow at about that market rate. Now let me jump back to when I think about the enterprise point-of-sale business. As I said, it's a fundamental enabler to the IT strategy of our retailers, and we're the global leader in software in this space. When I think about what's happening in the self-checkout business, we're also the global leader in self-checkout. And self-checkout, if you've ever used self-checkout, which most of us have, we provide the hardware and software that you would see in those deployments, mostly in big box and grocery. So when I think about what's happening in the retail industry overall, retailers are facing an accelerated digital transformation and an upgrade imperative to keep up with the changes that are happening in consumer behavior. We're seeing things like new entry points like digital shopping, online grocery ordering, that wasn't happening pre-pandemic. Services like Instacart are becoming -- required for all of our customers, and they have to serve their customers not only in brick-and-mortar traditional retail, but also online and buy online, pick-up in store, curbside, home delivery. All of those things are happening and the retailers need the ability to serve those customers with a unified platform. And that's what we bring. In January of 2020, we released our retail platform, and our next-generation retail store architecture with our flagship cloud-based core point-of-sale offering called Emerald. We have 8 customers that have signed and 4 customers that we have up and running. This platform helps customers evolve faster on a lower cost curve and gives them the flexibility they need to launch those new services and those new capabilities to their customers. And as you can see at the bottom of this page, we do this for the largest brands in the world. If I think about the breakdown of the business, we have a very diversified revenue stream. However, a large part of it comes from grocery and big box. 67% is grocery and big box, and those retailers have generally done really well during the pandemic, and their business continues to thrive. If I think about some examples of how we serve those clients, I'll start with Walmart. Today at Walmart, we provide the front-end self-checkout in the store and wall-to-wall services for Walmart. And think about now, it's peak time for Walmart and their stores, and we have accelerated SLAs during peak. And the last report I got is that we were 99.99% available for the lanes in their store. Think about what that means to Walmart and the impact to what they're doing. We're also working on some digital transformation activities with Walmart as they focus on customer safety and creating touchless transactions in their stores. For Pilot Flying J, not only do we provide that core point-of-sale platform, but we also virtualized all the applications in their store, both NCR and non-NCR. And what that does is it creates a more manageable environment and the ability for them to deploy technology faster in the store. And it also breaks the traditional hardware and software requirements, so we can create flexible deployment models where Pilot can now deploy software on different hardware platforms when we break that refresh cycle on the harbor side to expand our software footprint. And at RAI, we provide, again, the core point-of-sale platform that runs the store. It's deemed the central part of what they do. We can create mobile point of sale. We interface to their loyalty system, and we also provide access to their inventory data. So if you think about our business, all of these industries are deemed essential, and those are the industries we're providing. So think about the capabilities that we as NCR provide to our retail clients, and we are critical to what they do and how they run their store every day. Now let's have a look at the platform that I talked about. Really, we have a unique platform that are going to help retailers do this refresh cycle that I'm telling you about. So all of these stores need to hold on to their customers. They need to provide the integrated capabilities that I just described. All of the retailers have an imperative to integrate to the digital front-ends, to third-party aggregators, to home delivery services, to curb side, they have to create drive-thru opportunities. All of these things are driving this refresh or this upgrade cycle. Our platform allows retailers to deliver those digital capabilities and respond to the customers, respond to the change in customer expectations that's being accelerated by COVID. Across the board, these digitally enabled channels are seeing significant increase. I talked a little bit about Instacart. When we looked at online grocery pre-COVID, it was sub-5% of grocery shopping. We expect that to grow at 25% compounded annually through 2025. It will continue to be a significant part of how consumers shop for groceries. Again, these are all things that are creating this upgrade imperative, how do we deliver those services in an integrated fashion? Our next-generation platform, our retail platform allows customers to migrate in a virtualized environment. I described what we're doing for Pilot Flying J. We can virtualize NCR and non-NCR applications and create a single point of accountability for running the store. Again, that creates flexibility. It doesn't require a rip and replace, and we're going to call this in the market, software-defined store, and we're seeing tremendous success in the marketplace with that. And what this does for us as NCR, it allows us a foundation, a foundation to transition to the subscription model that we're talking about, it provides us a foundation to grow through new applications and to expand our overall addressable market. In addition to the technology itself and the platform that we've created, it's differentiated. We have a unique set of capabilities around services, both professional services, the ones that are very -- tied closely to our software. We have 2,000 plus service professionals that can provide advisory, consulting and migration services as well as ongoing application management for this platform as you make this transition. And then once we deploy, we can support customers anywhere they are. We have over 19,000 technicians around the world that are there available to perform in-field service calls if we can't manage the -- and remotely resolve the trouble through our digital-connected services platform. So when I think about how we're positioned, we're well positioned, not only from a technology standpoint, but from a sales and services set of capabilities to make this transition to the platform world and make our shift to subscription. So as I said, NCR retail is really well positioned for growth. Today, there are about 1.5 million lanes around the world using our enterprise platform, using our core point-of-sale solution. Our strategy is to move and migrate those customers to our next-generation cloud platform. That platform bundles all of the things required to run the store, the software, the hardware, services, adding payments. And then we sell it in a flexible commercial model that's a subscription, per lane, per month. When we migrate these lanes to a platform as a subscription, we bundle it again with our services and payments. What that does for us is it nearly doubles our wallet expectations from our customers. We can double the monthly revenues from our customers. And this isn't just something that we say, hey, look at what we're going to do in the future. This is what we're executing today. We launched the platform in January of 2020, and we're making great strides. I talked about the 8 wins on Emerald. We're also winning against our competitors. We're winning against GK, we're winning against TOSHIBA, we're winning against Lightspeed. Some of these instances, we actually have won back customers that had made a decision years ago to leave NCR, we've won them back. When I think about why? It's the scale, it's the scope of what we have. It's our technology and our service delivery capabilities. We're deploying these technologies in weeks and months, not years. And that's a big deal as retailers are trying to react to what's happening in the trends in consumer behavior and more and more digital services capabilities in the store. So we already provide the core point-of-sale that runs the store. So it's a very logical, easy step. And it's a simple step where we can just connect this core to our platform to allow multiple channels to interact with the store, and we still believe we're going to grow self-checkout at the market rate, 8% to 10%. So in summary, our strategy is pretty straightforward. We're going to retain our base and migrate customers to the next-generation platform, winning the lane upgrade imperative, and we're going to continue to grow self-checkout. That's our retail strategy, and that's how we're going to win. I'll turn it back to you, Owen.

Great. Thanks, David. As I sit and listen to both David and Frank, and I know we're going to hear the same from Dirk, is we have built our products, we have laid out our strategy. It's for those of you that heard it in 2018, it's pretty consistent. We've evolved it. We've modified it, but we've been on track. What we needed to do was build the products, build the go-to-market infrastructure, make sure our service delivery was right, make sure our ongoing support was right. One of the hardest things to do is to evangelize a marketplace, right? To then get the end-user to start moving on the adoption rates. And nobody wants to talk about the good things of COVID because it's been a hell of a year, but if you think about what happened, the acceleration and the adoption rate of technology by the consumer has forced our clients to now understand that it's no longer a nice to have, it's table stakes, to have this digital platform to deliver their capabilities to the customer. It's a perfect storm. We've been investing in our product. We've been positioning our offering. We've now gotten this tailwind of acceleration by the consumer and it's really paying dividends for both of the banking and retail business and it sure is on the restaurant side. So Dirk, why don't you take us through what's going on in restaurant?

That'd be great. Thank you, Owen. So I've been in this role for a year now, and I thought I'd start with just a little bit of background on our business. So we help our customers run their restaurants from a wall-to-wall perspective. It includes the core point of sale, as David described in retail, which runs and takes a payment from a transaction perspective, it supports consumer loyalty, it supports the back office inventory, all aspects of that restaurant. We refer this with wall-to-wall services, so we can take care of everything in that restaurant for them, given the GM or -- General Manager or the owner, the ability to call one number to be able to have access to us, to be able to come fix anything that's broken at the Edge, any technology is broken at the Edge. So I feel very good about the overall strategy, but let me double-click a little bit and walk you through the business specifically and share what we're doing. So we have about a $700 million business here and 94% of this business in Hospitality is restaurant-based. And of that, you can see the breakdown between enterprise and small businesses, and the restaurant business, we all know, has been hit very hard by COVID, extremely hard by COVID. The good news for us is that the majority of our business is quick service-based. And quick service has done quite well during this whole COVID experience. They've leveraged their drive-thrus, curbside pickup and then delivery as well. So we've seen their business stay relatively stable during that time. And we have 100,000 sites worldwide that we actually support and manage that uses our core technology platform, Aloha. And we're #1 by RBR's measurement in the U.S. And some fun facts here, half of the top 100 brands work with us and 32 of the top 50 quick service restaurants work with us. And so I thought it'd be -- sense -- it makes sense to share with you a little bit about these restaurants and what they're doing with us to bring some light to that or some color to that. So I'm going to start with Starbucks. Starbucks works with us globally, but in Europe, we've actually deployed our DCS, our Digital Connected Services, to have visibility of their technology at the Edge. And that allows us to proactively manage that technology, and we can remotely resolve things that are broken. And if we can't, we send 1 of our 19,000 professionals out there to fix those things. And the core goal is availability. Chipotle is another great customer. They've been growing like crazy and to help with that growth, they put a digital make line in place. Mithu is going to talk about this a little bit later in the roundtable. So I'm not going to go deep on Chipotle, but we've done some amazing innovation with them. We've also grown our enterprise accounts. We had over 10,000 new sites in enterprise with customers like Raising Cane's and Topgolf, just to name a few. And then a couple of other things I'd like to touch on quickly. One of the amazing things about our product is we can scale down to a single operator and scale up to thousands of sites. And so we've been with some customers from the very beginning. And a good example that's Chick-fil-A. If you ever go to Chick-fil-A and go to the museum, Dan Cathy will walk you through, and he'll show you the first NCR cash machine that they used, which is very cool, I mean, from a history perspective, but we can scale from a single site all the way up to thousands. I don't know of another company that can do that. And that's very, very important, especially for people that are growing their franchise businesses. And lastly, I want to touch on a customer who was hit very hard during COVID, that's Coupa Cafe. And Coupa Cafe came to us and they said, we have a challenge. We need to create a contactless environment. So let me describe what's happening. And I'm sure a lot of you've experienced this as you've gone out to eat at a restaurant today. If you go out today, people don't hand out menus anymore. A lot of them have QR codes. And so you click a QR code at your table and you get a menu, and you can go through your menu right on your phone. And when you go through your menu, the waiter or waitress comes over and you can order the food. And then it's a standard process from there. We took it one step further. We made that menu interactive. So when you sit down, you scan the QR code, you go through, you order your drink, it goes to the bar. When you order your appetizer, it goes to the kitchen. And when they're ready, they actually run it out to you. And so it's very convenient from a consumer perspective. Now the best thing about it is at the end, if your kids are driving you crazy or you're going to a show or something, you could just scroll down and pay. You don't have to try to find your server to get the check and then pay, and there's no moving of credit cards back and forth. So it's a very, very cool consumer experience. In fact, 50% of the orders at Coupa Cafe are going through that transaction base right now today. And for the restaurant itself, the big benefit is labor is tough to find right now. It's really difficult. And this takes labor -- you can run your restaurant with less labor because the consumer themselves, we would be ordering, and you don't have to have that waiter or waitress there, you just have runners out to the tables. And on top of that, they're seeing increase in orders and increase in turns just because of that flexibility. So that's a great example of some innovation that we did during COVID to really help customers, and that's available at 13,000 sites now. Anybody that has our mobile capability is running with that capability today, generally available. Let me drill down into why people are choosing NCR Aloha. The first thing I would tell you is we have the core restaurant management software, the ability to take a payment, deal with loyalty, deal with inventory management, all aspects of the restaurant. We call that Aloha, and it's our restaurant management platform. The second piece is what I just described with Coupa Cafe. It's a digital experience, both on-prem and off-prem. And we support that, and that connects through our platform, our Aloha platform, it goes down to the kitchen. Tim Vanderham is going to talk about that in a little while and give you more color on what exactly that does and how it works. To bring it to light for you right now, though, let me describe something that you would have on a Sunday afternoon on a game day. You want to order some wings from Buffalo Wild Wings and you go to your GrubHub app and you order your wings on your phone again. When you press order, it passes that to us, it's our technology. And our technology grabs an order, it puts it to the appropriate restaurant, they create the wings and they give feedback back to GrubHub to let them know when it's going to be available. And so they can send the driver to pick it up and deliver it to you or I. And so it's a great experience, again, going through our core platform. And last thing we do is we wrapper that all with wall-to-wall services. As I mentioned before, we have 19,000 services professionals out there. We have global help desks. So for those GMs and owners, they could pick up the phone and call us. And it's one number to take care of all technology in their store, and we're doing that with a number of customers today. And we bundle all that together, and we call it Aloha Essentials, and you'll hear me refer to that number of times today. And we sell that for a monthly subscription, and we still get transactions on the payments, and we still get transactions on those clicks from an order perspective from GrubHub or the digital application. So it's been really sticky and it's really taken off in the SMB marketplace, the small business marketplace. So let me share why I think we can win in this marketplace. I would tell you the first thing when I took this role on is we had some challenges with customer satisfaction, with service and delivery. And I will tell you, we made great strides this year, big steps to fix those things. And it showed up in our customer surveys and our NPS score this year, which is fantastic. And that's the baseline that we have to work off of. From there, we can increase our share of wallet with these customers. We've only transitioned a small portion of our customers over to the Aloha Essentials. And when we do, we see a doubling of ARPU. And so we have a great base, 100,000 sites out there worldwide as we convert them over, we're seeing an increase in ARPU. Additionally, we have to focus on new banners and selling new banners. And so we've done 3 things to support that: first, we've doubled down in our salespeople, and we put them in Tier 1 and Tier 2 cities, and we want to get them out there to be focused on the customers. The second thing we did was we did blitzes in 5 cities so far, where we take 50 professionals, we stand them in the marketplace, or send them into the marketplace and they go door-to-door and talk to the restaurant tourists, what do they like, what's working, what's not working. And that has opened up hundreds of opportunities for us to go farm and cultivate. And I feel very good and very strong about the backlog we're generating there. And the third thing we're doing is around the channel. Our channel, we're infusing marketing dollars into the channel, and we're doing blitzes in the channel territory so they can actually grow as well. I think the combination of those 3 things will really boost our sales and increase our market share. Now here's the biggest benefit we have. I mentioned 100,000 sites. We've only converted 3% of them so far. If all we do is convert the majority of those sites, we will be wildly successful with the numbers that Tim Oliver's going to share with you later. And the last thing I'll mention is on the margin side. We'll get enhanced margin through mix. As we mix to the Aloha Essentials, and we get the hardware-as-a-service, we get software-as-a-service, and we get the services wrapper around that, it's going to give us a much stronger ridge, and we're going to enhance the margin for the business. And I'm proud to say that we deliver earnings every quarter of the year in an annualized basis with this business when my competition is losing hundreds of millions of dollars. And so it's a great business. And I hope this helped you understand a little bit about the business. And more importantly, about the growth trajectory that we have going forward. And so with that, Owen, I'll turn it back over to you.

Great. Thanks, Dirk, Frank, David. I was asked last week in an investor conference as the operations guy Mike has his vision and strategy, how are you feeling about the operations of the business, especially given some of the history? And my response was an immediate -- I couldn't feel any [indiscernible] and that [indiscernible] without having been through 2 years of some really tough decisions, some tough initiatives that needed to be addressed from our product quality, to our support organizations, to our manufacturing, to our software build, to our services on [indiscernible] groups. It's made a huge difference to the effort over the last 2 years. It's made a huge difference to have this model and these leaders in place, targeting our resources on the market opportunities that make a difference. You hear in each one of them talk about the competition. We know who they are. We believe that we are going to compete and win against them in each of our markets. Really excited about what the team has done here. Tim Oliver is going to walk you through the numbers in detail and peel the onion back even further on some of the segments that each of you talked about. And up next, we're going to spend some time with the delivery team. And those are the members of the organization, the leadership team who are really behind the scenes, fully aligned with their GMs on making sure that the hardware, the software, the services is coming together in a way that allows you guys to win every day. So with that, thanks, and we're going to move over to a roundtable with some of our delivery team leaders. So I'm here with 3 of the leaders from the delivery side of the house. You just heard from the GMs owning the markets, owning the opportunity. And when you get down to the high impact of delivery and support, it really falls to leaders like the 3 that are with me this morning. Let me introduce Mithu Bhargava, who runs our professional services; Tim Vanderham, who runs software as our Chief Technology Officer; and Adrian Button, who runs the lean factory. So good to have all 3 of you. Adrian, I'll start with you. So last time we met with investors, we were stumbling maybe, would be a word that could be used, out of the factory with product, our quality issues. We had some supply chain issues. You were the man under the gun, if you will. And now you own -- after having fixed manufacturing, you own what we've announced as a lean factory. Maybe you can talk about the lean factory and the impact on balancing quality and cost efficiency because I know both are absolute requirements. We have defined those as the priorities. We've taken the P&L out of the equation, but how are you thinking about delivering on both of those goals?

Yes. So the lean factory, Owen, pulls together manufacturing, operations, our supply chain, our service operations, procurement. That really gives us just a different approach to the way that we've looked at the business previously. It gives us a holistic wing-to-wing opportunity to look at the products that we're developing through the whole life cycle. And combining the 2 organizations, we're already seeing the impact of the product -- on the product side with our product reliability. One great example is our modules in our ATMs. We combine the teams, we looked at how do we improve through the whole life cycle from the time that we manufacture through the servicing, and we've improved our reliability by over 40%. So just with the early opportunities that we've seen, and we see that the whole approach is going to give us a different product reliability that we can install in the fleet. Second area we focused around is product standardization. We introduced standard offers through last year, as that offers offer a number of benefits for our customers, reduce lead times and standardized products in the fleet for us, reduces our inventory, reduces the number of products and parts that we need to purchase. And we've seen significant improvements, both on our working capital as well as the ability to deliver on time for our customers. Our lead times have reduced by over 40%, and we're consistently now delivering product in the high 90%. So we've seen great uptick from our customers in the CFI market, North America, 30% of our total orders for ATM last year were of preferred offers. So we're seeing some of those benefits come through. And then our footprint, in 2018, we reduced the number of rooftops we had by 50%, and we partnered with a number of contract manufacturers. And we're really now starting to see the benefits of that come through. We've rightsized our internal factories. We've seen our utilization now improve by 40%. And that it gives us the flexibility with our contract manufacturers to increase volumes where needed as we continue to grow our products. And then lastly is around connecting our products in the field. We have over 13 million devices. And we heard David talk earlier around the performance that we had with Walmart through the peak season last week where we had 99.95% of the lanes available. That's all through the ability to connect our devices. Our Digital Connected Services platform is going to be fundamental as we continue to grow our services business. And we see that as a key enabler for our customers to have more uptime on the product as well as from a services perspective, when we dispatch an engineer, we know we've got the right part for the engineer to perform the service operation. So we're in a great position to outperform our competition, both on providing world-class products as well as world class service.

Okay. And we see the Net Promoter Score that has, for the company, more than improved threefold, and a lot of it has to do with those quality measurements. I know for the investor group, we lost $125 million within the hardware operations in '18. We got close to breakeven last year. As you look out to '21 and beyond, you're comfortable the cost structure you've built and the flex you build will allow us to operate that business where?

Yes. So the volumes that we've seen through this year is what we've rightsized our operations to be profitable moving forward. So we can flex up when needed, but we have the infrastructure in place now to be profitable with the volumes that we see through next year.

Awesome. Great. Thanks. Tim, you came on board about the same time Mike and I did. So I think July of '18, as the Chief Technology Officer. And one of the things that you were immediately challenged with was how do we transform the business to be a software-led business. How do we put the discipline, the methodology, the architecture in place that really credentials us as a software company because we have put the flag in the ground early, and we wanted to continue that prioritization. So what did you find? And where do you think we are today as a software company?

Yes. Thanks, Owen. It's a great question because as we wanted to make that shift in '18 to being a software and services-led company, I came in and I did the assessment of the organization. I realized really quickly, we had to kind of rally around 4 fundamental parts that I think are fundamental aspects to being a strong software company. So one is to institute a really strong process discipline; the second is to build a platform where we can deliver common business capabilities for the industries that we serve; third is to create that modern software architecture, so we can be fast and nimble; and finally, to create a culture of innovation for the company, not only in software, but kind of across the company. So I can share a couple of examples across the industries that we've really proven, I think over the last 2 years, that have shown that we are now a software company. So if we start on that strong software discipline. We got a lot of feedback, just like we did in the hardware world, where we weren't delivering on the expectations for our customers. So I implemented a say-do ratio. What is our say/do ratio on software quality? On software deliverables? Are we making our milestones? Are we making our customer commitments? And we did that in the wide open. So in every industry, we published our roadmaps for our strategic growth platforms, for our core deliverables to our customers. And we reviewed that with our customers on a monthly and quarterly basis and measure ourselves against that, and we've greatly improved. David mentioned Emeralds. I'll use retail as an example here. David mentioned in retail, our next-generation solution Emerald. We've now got 8 customers on board. We're rolling out to multiple sites with the Emerald solution. And from the beginning of our first Pilot clients all the way through now, BevMo and SpartanNash and Bashas' that are going live, we've shared with them our fundamental roadmap day in and day out, quarter-over-quarter, and we're delivering. So our customers are really happy, we're giving good feedback around that -- we're getting good feedback around that. And it shows a testament to that say/do ratio changing inside our software culture as a company. The second area was, how do we build a platform, a platform that serves business capabilities for banks, retailers and restaurants? We know our mission is to help our customers run their store, run their bank, run their restaurant. And so we've created a platform that really creates services for those industries to serve their consumers. In the retail and restaurant space, you've heard this from the GMs, we have a platform, a business services platform that have services like a menu service, a catalog service, an order service, services that allow them to interact with their consumers day in and day out and meet the needs of their business. And then I'll major on the banking side, for an example, here today, we have a channel services platform that really bridges our Digital Banking solution, where we do millions of transactions a day. Millions of transactions a day around balance inquiry, money movement, bill pay. And then as we created our channel services platform with additional services around deposits and check capture, tying that into that Digital Banking solution, we're able to offer a whole new set of services to our customers. CIBC is a great example. On your mobile device, our business banking customers for CIBC can pre-stage transactions on their mobile device and then complete that in the store or in the branch later or out of a locker. And so that's live in production today with CIBC, which is a great example of how we're building a platform for speed and agility with our customers. Then that all flows directly into creating a third area of a modern software architecture. A modern software architecture where we've really embraced a dual-cloud strategy, leveraging Google Cloud platform and Microsoft Azure to create those services that I previously referenced, where our customers can easily integrate those. Easily integrate into their solutions in a very open API ecosystem. That's table stakes today in the industry of having an open API ecosystem where our customers can integrate their own solutions, our solutions and third-party solutions to serve their customers. A great example of this, it's in the Hospitality space. When COVID hit us in March across the globe, restaurants were largely shut down. They had to figure out how they were going to take online orders and serve that through delivery or through pickup in the store. Our platform and the services that I previously mentioned, allowed our customers to rapidly respond. 3 great examples are Nando's in the U.K., KFC Australia, and Dirk already talked about them, the Buffalo Wild Wings right here in North America. Each of those 3 customers increased their online ordering in a matter of days by over 200% when COVID hit. That just goes to our modern architecture, and how we can quickly scale for our customers, and that's happening day in and day out for thousands of customers across the globe. And the final area I would say that really solidifies us being a software company is that culture of innovation. And that culture of innovation allows us to rapidly respond to opportunities with speed and agility for our customers. And it doesn't just start and stop with my software organization. It extends across the entire company. Most importantly, when you think about Mithu's organization, and how they're out with our customers day in and day out, implementing our software, co-innovating with our customers, it just shows how that culture of innovation is spread much further than just the software organization, and we're doing that with our people. We're doing that through Hackathons we run internally, Hackathons we do jointly with Mithu's team and our customers and really focusing on hiring the right talent and the right software skills to drive our company forward. So the team's been incredibly receptive. We've made a lot of change, a lot of progress in this transformation. At the end of the day, it's the people that we have, the platform strategy that we have and that continual, constant innovation mindset, that's going to allow us to be successful today and in the future with our customers.

Yes, we get -- I mean, those are great stories, and I think both the long-term commitments that we've made on a product, but as you gave great examples of our quick turnaround. So the responsiveness of the organization to immediate customer needs doesn't get sacrificed for -- looking at long-term development of product and getting them into the marketplace. You mentioned culture a lot. We get asked about culture. And there's a big shift, we believe, I think all of us see it. It starts, I think, with the outfits maybe that the CTO brings to the table, but I think you've done a great job [indiscernible] and maybe just comment about how you're seeing that culture shift within the company take place with both existing and new employees?

Yes. I mean when we look at the 4,000-plus software employees that we have in the organization, it's really around ensuring that we've got the right talent for domain knowledge across banking, retail and Hospitality, but then we're hiring new hires from universities, so just like we have across the street at Georgia Tech. And really build that funnel, as you said, build that pyramid. So we've got the right balance of domain knowledge with skills that have been in the industry for a while with new talent coming in that has a new fresh mind for innovation as well. So we're seeing great progress there across the board.

Great. Great. You mentioned Mithu in the professional services team. Your role has certainly changed. Likewise, you were, maybe, a couple of months ahead of Tim and I and Mike into the company. And you've seen huge change in what is -- in a really critical part of our business. Maybe you can talk a little bit about how you play the role of fulfillment of the customer solution as that Tim and team are architecting?

Absolutely. So professional services is that trusted technical adviser that brings end-to-end solutions to life for our customers. You heard from our general managers about our next-generation software solutions. Now as our customers transition to this next-generation of software solutions, we've actually extended our portfolio of services to work with our customers through the life cycle. We now lead with advisory services, we work with our customers on co-innovation and implementation of software solutions, all the way through to the ongoing management of their applications and actual operation of their business processes. And what we've noticed is as we started to work with our customers through that life cycle, we are essentially becoming integral extensions of their technical teams, which is absolutely great to see. When we take a step back and look at professional services from an organizational perspective, we have over 4,100 customer-facing software professionals in 55 countries with deep domain knowledge and industry expertise, working with our customers every single day. And as Tim talked about, the shift to a modern architecture, a shift to an open API ecosystem, we're constantly working on revamping our skill sets and bringing new talent and new skills to the table, so we can truly lead our customers in their transformation journey. So in a nutshell, Owen, when I talk about professional services, what I'd say is that professional services is that glue that works across our customers, all parts of NCR and our partners to bring us software solutions and technology innovation to life.

Yes. And I think that's really an important part. I know both of us come from a heavy services background, we've talked a lot about the role of services, you mentioned being an advisory and a partner. Sometimes that gets lost, right? And people have now become the -- do what I say and not what I can do, and you've really balanced the equation of bringing expertise and really getting your team's hands in the mixing bowl, if you will. And I love that analogy of the glue because I think we have all these assets, the hardware, the software, the capabilities of NCR, and I look to your team to really be the mortar, the glue that hold it all together. Maybe you can talk about some customer examples of where your team has taken from an advisory, guiding our customers to implementing an ongoing relationships?

Absolutely. So I always say professional services is that engine to drive customer-driven innovation. And our response from our customers has been hugely positive. Customers come to NCR for our technology, customers come to us for our industry expertise, but most of all, they come to us for our people and the trust and the relationship that we build with our customers, right? And to that point, we're seeing a shift in how customers are choosing to engage with us. They're moving away from onetime transactional engagements to long-term multiyear professional services engagements. They're also starting to engage with us increasingly in an advisory capacity. So all this sounds great, Owen, but nothing illustrates it better than actual customer example. So I'd like to share a few. Whole Foods. We signed a very large 5-year PS subscription to run their kitchens and their markets, leveraging our advisory services and our ongoing application management services. A huge testament to the strategic relationship we have with Whole Foods, but also to our next-generation retail platform. Looking at our restaurant business, great example is Chipotle. As Chipotle started to move towards a digital channel strategy, we worked with them on a solution, leveraging our Aloha platform. So they could essentially create a second makeline for digital orders. So that they could increase production capacity without adding any physical footprint in their restaurants. And the results have been amazing. Our joint efforts have resulted in improving order accuracy by 99%. Another example, RBI, marquee restaurant customer, we're running their end-to-end software applications, keeping them up and running so that they, in turn, can focus on their core business. Right? Moving to the banking side, Trustmark. This is a great example of a pure advisory engagement. Trustmark came to us and said help us build a modern branch infrastructure. And we helped them redefine their consumer experience, talked about how they can drive up more consumer adoption, drive operational efficiency. So to your point, Owen, very different type of engagement. You know I could go on and on about this, but I'll leave you with one last example. We signed a 10-year PS engagement with a large European bank to essentially deliver and run their ATM software and services in a multi-vendor complex environment. These are the type of engagements we're now seeing. So hopefully, you share the enthusiasm and the optimism we have about our professional services business and the strategic impact that we're driving for our customers.

Yes, I do. And so do our customers. And I've mentioned this a couple of times, our Net Promoter Score, which -- we made a leadership decision to put our Net Promoter score out there for everybody. We tied 10% of everyone's bonus to that across the entire organization for Mike to all of our frontline employees. And I think what you all have delivered, whether it's on the quality of hardware, on the software quality and hitting the milestones committed to and then delivering the total package. Our customers are validating that we're in a place that we weren't even close to 2 years ago. And I really complement you and your teams and the rest of the organization for really taking a hard look in the mirror and understanding we were not capable of executing where we needed to be. And I think what excites all of us because I am excited about what you've done and I think what everyone's doing, as we look at the strategy that Mike's outlined, I think every one of us are absolutely committed because we've gone through 2 years of fixing what we needed to and believe that we're on the foundation to really spring forward. And to serve our customers and to deliver for our investors against some significant growth opportunities in the markets we've decided to compete. And with our size, scale, global reach, when we look at the competitors in each market and all the GMs talked about them, but we all know them. We know who they are and who they're competing with. And we believe we will beat them and win and deliver for our customers and for our investors. So thanks because you guys are in the trenches day in and day out, delivering for us, for the team, for our customers. And as we move forward, I know you're going to continue to raise the bar because you have been doing that consistently. So I think it's important now to take everything that GMs have talked about, what the delivery team has talked about to validate we're ready to go. And now hear from Tim on the numbers, and I know that's exactly what the investor community is specifically looking for, how do these efforts now add up to numbers and deliver return on investment into NCR. So with that, I'm going to turn it over to Tim and let him talk about some numbers. And I'll join him and Mike shortly.

All right. So I've got the heavy lifting to do today. I've got really 4 goals for my presentation. The first is to give you some more granular information on all of the qualitative stuff that the business segment leaders just talked about. I also want to make your modeling efforts easier having just gone through getting to know this company myself. It's not always easy to understand what's going on inside of NCR. We want to make that easier for you as we go through today, providing some subsegment information below our segment reported segments. I want to make sure that you see a path to 80/60/20 that makes good sense and that makes you understand that this is not a hockey stick of a plan, but rather allows us to get there on a very methodical basis. And lastly, I want to make sure that we give you the metrics necessary for us to continue to have the dialogue about whether or not we're performing and whether you agree or disagree with the valuation as we go forward. So before we go into the more strategic stuff, I do need to touch on the tactical because, first, you're going to ask; and secondly, use of very round numbers in the starting point for my presentation. And when I do that, if you did some top level math and use the bottom end of those ranges, you come to a conclusion on our fourth quarter results that would not be consistent with our expectations. So consistent with our guidance at the end of the last quarter, we still expect our fourth quarter to be very much like the third, very similar in every regard from a revenue perspective, from a mix of revenue perspective, from a profitability perspective and even through to cash flow. We are still -- the asset reviews and restructuring efforts that we talked about last quarter are still underway. And importantly, that $90 million of cost out that we talked about that was -- I think we said at least $90 million last we talked, that number now looks to be about $125 million to $150 million of cost out that will be out on a more permanent basis as we exit the calendar 2020. As far as 2021 goes, we will not try to call the end of the pandemic. Others have, and we don't think it's the right thing to do. We're going to presume that things steadily improve from this quarter to the next quarter and the sequential quarter thereafter, much like we've called for the fourth, we'll assume that, that happens at least in the first half of next year. What we will do is work very hard to control those things we can control, like our spending levels and our ability to generate cash in a shortened cash cycle. So this chart's a convention you're going to see a few times today. We're going to use it to describe each of our business segments. If we go forward, I'll even dig a little deeper into a couple of segments as we go. From a top level perspective, revenue growth over the next 4-year periods are from 2020 over to 2024, mid-single digit, so about a 5% growth rate for the company in aggregate. That revenue when we get to the end, however, will be very different composition of the revenue than it is currently. I'd argue a more valuable revenue mix. And in fact, because of that, the adjusted EBITDA margin will go from 14%, expand by 6 points to get to our 20% target. We believe that's attainable and should be sustainable, which is important. Notice, too, that 14% is relatively low, coming off of a COVID year. That's a 5-point expansion over our 2019 performance. The free cash flow, you've seen great performance in our third quarter. We've indicated that our full year cash flow ought to be very powerful. We hope that all of the improvements we made thus far will be sustainable. We're continuing to make further improvements to our free cash flow cycle. And I fully anticipate that as profitability increases, so our free cash flow. And in fact, over this 4-year period, we expect some $2 billion of cash we'll need to redeploy. And then lastly, you've heard a lot about our 80/60/20 mantra over the last couple of days. When we get this right, we'll hit that 80% target. Once we hit the 80%, the 60% becomes actually a short putt, we're likely to be above that $60 million. And you'll see today that the EBITDA margin ought to get close to 20%. About half of that improvement will come from good cost discipline and productivity from a manufacturing perspective. On the other half, a shift of our product set to a higher value and a higher profit of revenue streams. So because we say 80/60/20 a lot of times, I think it's important to define what those are. The 80% is a percentage of our revenue that will not come from onetime hardware sales, meaning those who come from services and solutions and really a higher profitability revenue streams. The 60% represents revenue that has a contractual -- predictable contractual agreement behind it that allows us to have sustained revenue over multiple years. So a recurring revenue. And the 20% is our EBITDA margin on an adjusted basis, the adjustments we intend to make and that we've made thus far are really just those that make it recurring and sustainable. So higher profitability. Let's go through the 3 segments. This chart -- it's much like the one from 2 charts ago, I made 3 changes to this one: first, there's a yellow line on the page, and you'll see this in each of our segments. It represents the average margin rate for our company to allow you to know whether or not this segment has and will perform above or below the average of the company. Secondly, I've put some gray boxes with green bar -- green dots around them, that show the allocation of the corporate cost layer to these businesses. So when we talk about the profitability of our business, these are fully absorbed numbers. We pushed a lot of cost down into these units. And if you're going to do with some of the parts analysis, you presume that some of that would, if not all of that, could go away. And then finally, on the bottom left-hand side of each of the segment charts, we've added metrics to watch. We want to make sure that when we talk about the progress we're going to make against 80/60/20 and the progress we're going to make against the strategy that you can gauge that based on our performance on these metrics. From -- so from a banking perspective, revenue up 4%. You've got in the Digital Banking business and there that's growing much quicker than that, and we'll get to that. Hardware business in there that's relatively flat. And then a very good services business in the middle that's going to grow just slightly higher than the company average, all -- taken all together, about a 4% growth rate. On the upper right, you can see EBITDA margin up 5 to 6 points, relatively similar to the rest of the company. Notice that this business is a very profitable business already. It's going to get more profitable over time. Even though this business does contain the hardware, the ATM hardware business that is not as profitable as the rest, and in fact, won't grow. About half of the total company improvement in EBITDA dollars will come from the banking segment over this period of time. And inside of this segment, 40% will come from our improvement in Digital Banking, the growth in our Digital Banking business; 30% will come from our lean factory effort that Adrian just talked about; and another 30% will come from a product mix shift away from -- as software and services take over for the hardware business. I've added the Q3 year-to-date metrics in the bottom of this chart for the metrics to watch, and we will continue to provide these on a quarterly basis as we go forward. As I said, Digital Banking is very crucial to the excess of the banking unit. The registered users, we've reported up 12% in each of the last 2 quarters now at 24.3 million users. I think you heard that a couple of times already today. And recurring revenue down to 3 decimal points. On the strategic execution, this business got an early start. They were the first business to kick in the 80/60/20 effort. They've already moved a significant portion of their revenue stream into the software and services segment, they've got a head start. They've got a head start in the recurring, therefore, as well, they will exceed the top end of each of those 2 revenue set. They will exceed the top end of each of those 2 revenue sets. And their margin rate, therefore, should -- starting much closer to 20%, it will exceed 20%, And expand by those 5 to 6 points. You've asked many times the ATM -- the mix of ATM hardware to software and services and ultimately, the digital banking inside of this banking business, a very large banking business. So we're breaking it out. Our digital banking business is a -- as you heard earlier today, a $500 million business. The other banking business, it's a software and services business that are sometimes attached to ATMs, sometimes not. Those that are the top of this page are less attached to the ATM does at the bottom being more attached in the 15% to 100% attachment rate depending. And then lastly, at the bottom of the page, the $900 million of ATM hardware sales. As I said, the attachment rate increases as you walk down the page and the profitability rate decreases as you walk down the page. So not surprising digital banking with the highest margins, software and services. With margins relatively in the middle, still very good and ATM hardware with the lowest. And I'm going to take this one step further in the next slide. So if you look here on the left-hand side of the page is our digital banking business at $500 million of revenue. And on the other side is everything else in banking to describe its growth to break out digital banking from the rest, a 10% to 15% growth rate on the $500 million is really about new clients, getting more users and getting more share of wallet with every client we bring on board, a pretty compelling story and one that we started to execute against. On the bottom, you see a 28% margin, EBITDA margin rate in this business already, and it should grow very nicely, in fact, even expand more quickly than the overall companies. As we start to get scale in this business, as we get our product offering expands, we move into gentle spaces that should be more than enough to offset what I'd call some modest price pressure in that business. On the other half of the page and the remainder of the business is still a good business, $2.6 billion of revenue, 2% to 4% growth rate. Remember that within the areas the solutions and services business at $1.7 billion 2/3 of which is already recurring. And so it's a nice valuable revenue stream in there to offset the hardware, which will be relatively flat. And from a profitability perspective, a 16% EBITDA margin currently growing at 4 to 5 points. About half of that is going to come on the hardware side as we get more productive and you heard Adrian talk about reducing our physical plant to be appropriate to current levels of demand. And to make sure that we continue to drive throughput yields and costs that are world-class. And then the other hand is going to come from a mix shift away from hardware and towards solutions, services and software. Let's talk about retail. The retail business growth of about 5% overall for this business as well. The SCO business, 8% to 9% or 8% to 10% growth in units. We're going to sell those in a different model, sometimes in a subscription model. So that growth rate that we just demonstrated in SCO might not be quite that high, but a very good backdrop for this business from a scope perspective. We're going to convert lanes to platform lanes. Those lanes, therefore, will bring more revenue with them when they come and more profit with them when they come. So more lanes, more platform lanes and more revenue per lane. When that happens on the right side of the page, profitability of this business must expand and will expand pretty dramatically from a 12% EBITDA margin rate today by 5 to 7 points so falling just below our goal of 20% for the company in aggregate. But a pretty remarkable change from where they are today. 2/3 of that is going to come from changing our revenue mix and getting away from our current model and closer to the platform offering. Then about 1/3 of that improvement will come from productivity that Adrian will help us generate on the hardware side. On the bottom end, his metrics to watch aren't that different platform lanes, that's about 1% of our total as are described there as platform lanes. What that product offering is getting a lot of eyeballs on it currently. The conversions are starting to take hold. It ought to be a geometric rate of growth. When that happens, you'll see that platform lanes number tick up with that our ARPU should also rise. SCO revenue because it's a hot topic currently. And because SCO revenue is growing nicely in aggregate, a very good demand backdrop. We'll call out SCO revenue, $642 million through 3 quarters and this piece of recurring revenue. His 80/60/20 targets. He's not going to get all the way to 80 in this period of time, he's starting a little later and the demand on the scale hardware business is going to keep that number from getting all the way to 80%, not a bad thing that hardware sales are increasing. And will fall a little bit short of his margin targets starting at a relatively low number. The Hospitality business. A very high-growth rate here, 8% to 10%. Dirk told you about all the reasons why the number is low. We've had a step down in revenue in this business that had more to do with market dynamics in COVID and having a product set that wasn't sufficiently competitive in 2018. We've rebuilt that product. I'd argue that you're seeing a troughing here I think COVID pulled forward that troughing. And that 8% to 10% CAGR is one that dirk feels good about. When that happens and when he's bouncing off a fixed cost layer that's relatively high, you will see pretty rapid margin expansion. And you saw that, in fact, in the third quarter results. He will almost double his margin over this rate over this period of time, taking what is a 10% margin rate up to 20%. That rightsizing his cost structure having come through a period of time, which we had to reinvest back into this product. We had to rework the way that we sold the product, and we reworked the way that we went to market. Dirk now has the ability to get leverage off that cost structure and to grow his way out of it to deliver pretty powerful profitability. So volume and scale will help and subscription pricing is going to help here a lot from a margin perspective. The bottom then ask us quite frequently on the metrics to us, that is how many lanes it converted to the platform. In this case, we call the platform Aloha Essentials. That's a 3% conversion rate currently. That's going to grow nicely and ask us about his recurring revenue. This business is very appropriate to our subscription model. We should see this business do well on the revenue metrics. And when that happens, it pulls the EBITDA margin with it. You ask us about our payments business quite frequently. So we thought we'd break it out here. It is reflected in the financials of each of the 2 segments I just talked about in retail and hospitality. Here, you can see this isn't a mix of how we recognize it in the P&L, but rather where the revenue comes from. So about $100 million business currently, you remember that 60% of that came with the acquisition of JetPay. The other was existing from our gateway business, $100 million business in 2020. We think this business will grow at 20% to 30% over time. The color coding suggests that retail and hospitality transactions currently make up just a little bit less than half of the total payments revenue in our business today, the other being from non NCR payment streams. As we go forward, the growth rate is going to skew very heavily to payments that we generate through our devices and our platforms. At the bottom of the page, we put up an addressable market up there a NCR POS addressable market. That represents that $1.5 billion are payment streams that we currently control through our devices. They come through our customer set. And while we won't capture all of those, that is the opportunity that we can go chase to fuel that 20% to 30% growth rate. So I'm now going back up to the company level again. I'm going to do a couple of bridges here and help you think about -- how we think about the move across the -- from 2020 to 2024. That moved from $6.2 billion at the top of the page in revenue down to $7.4 billion at the bottom of the page, $1.2 billion in improvement. Because each of these graphs is the same size, really, the relativity of these bars is helpful, I think, in describing that improvement. So let's start on the left-hand side. Price, modest degradation in price across all of our products that I don't think that will surprise anyone. It's a competitive world. Organic volume and acquisition volume, there's a mix trade-off here. I've let those bars overlap a little bit. I'm not sure where exactly that mix will come from. If we invest more in acquisitions that have -- that bring revenue with them. Then there will be less we'd invest in our internal growth or organic growth in product setting. So they'd offset one another. But really strong organic growth, and we just discussed that and very little, frankly, in the model with acquisitions. By segment, each of the segments contributes nicely here with our larger segments contributing a lot more. That said, you notice the hospitality here punches above its weight and delivers really nice growth. And then by product, it shouldn't surprise you that hardware will be less than it was in 2024 than it is in 2020 overall, especially because we won't be selling hardware as a stand-alone entity much longer. Software business will grow nicely. And the services business, similarly, will grow about 1/3 of our total growth over that period of time. The shift to recurring revenue is a causal that we've used to describe our results for many quarters in a row. And I think we've succeeded in confusing people as we move forward. So I thought drawing a picture would help. My economics professors used to say just draw the picture. So I've drawn the picture here. In the yellow bars are the foregone revenue that we would have recognized in previous years, under our old model of accelerating forward on a perpetual license, all of the software and services associated with that sale. And the green bars then is the cumulative effect of not recognizing those yellow bars, but rather allowing it to occur over time on a subscription basis. As you can see, because these contracts tend to be about 4 years in duration because we're legging into this change starting in 2018 and really growing the geometric rate as we walked out the curve. You can see the crossover point for this becoming a drag on results to being a benefit to results is somewhere in late 2022. The impact actually starts to be relatively substantial in 2023. And when we get to 2024 and talk about the delta from where we are today to where we're going to be. It's a very important driver of the absence of the negative here is a very important driver of margin expansion. So I suspect there'll be other efforts to convert to recurring as we think through ATM as a Service or SCO as a Service. There may be other things that we do that change how these yellow and green bars look over time. But I do think that, that crossover point is the right one to think about. And thereafter, it might just reduce the upside. Another bridge, this one on EBITDA margin growth. So I -- again, 3 ways to think about it, also the similar setup. Those are scaled for the same size. And so each of those green bars represent a relative change. Let's start on the cost side. From a cost perspective, our product mix shift -- so mix like, say, away from hardware and toward digital banking. Or away from -- towards subscription sales and away from our traditional model, those will drive a substantial portion of our margin expansion. Let's call that the 80 metric in the 80/60/20. The 60 metric then is the second one that shift the recurring. That shift in recurring is incredibly powerful, not only from the previous page, you see that the tailwind becomes -- or the headwind becomes a tailwind, but you also will see that it's a much more profitable product set mix. And then lastly, productivity, I've mixed in this bar, both the fixed productivity or the direct productivity and the indirect productivity. We talked a lot about cost out. I'd argue that, thus far, in 2020, we focused on the indirect productivity and the cost I just described, $120 million to $150 million is really focused at that. And as we get into 2021, you heard Adrian say, he's already rightsized plant to a certain extent. We've got some more work to do to make sure that our expectations for future period demand are aligned with our underlying physical plan. That will drive some direct productivity, I think, in the 2021 and beyond time period. Those are both mixed into the total productivity bar, so an even split between a shift in our revenue set and our productivity efforts. From a segment perspective, much like it did on revenue hospitality's margin expansion and growth rate allows them to punch above their weight the retail business drives nice profitability expansion, and the banking business contributes not as much as you think it would because of its size and a lot of that coming from almost 1/3 of that coming from the digital banking business. And by product, services, software and hardware, you might be surprised to see that the hardware business actually is contributing to margin expansion. And as I talked about, that's because we're going to manufacture more effectively and more efficiently with a continuous improvement culture. When we are profitable, we will generate a lot of cash. The 2 yellow bars on this page are meant to represent the things we can control or influence. From a capital perspective, I matched up depreciation and amortization with CapEx at about $300 million each. Those numbers may not be exactly that. I think next year, we're trying to get our CapEx after many years in a row with spending beyond depreciation with CapEx. We're trying to get those more in line. We're certainly trying to scale the growth CapEx and not constrain it, but rather keep our maintenance and internal CapEx lower to a lot more to go to growth. And I'll describe on the next page, periods of time which we might allow the capital spending to go slightly higher than depreciation. And from a working capital perspective, the improvements we've made in inventories and in receivables are sustainable. And we think that, that $1.2 billion of revenue growth over the next couple of years can be funded with not very much of a draw on cash from a working capital perspective. So we'll continue to work those things. We can work. The rest, of course, we're more subject to interest expense and tax. There's a small bar here in disc ops, and I'll describe that in the next page. So cash generation we're going to do it the old fashion, where we're going to make more money, higher profitability, it will convert to cash, and we'll describe the quality of that profitability. We will become more efficient on CapEx, and we will SKU more heavily toward growth CapEx. Our cash cycle improvements we've delivered to date, we will sustain, and we'll go find some more, particularly on the inventory side, where I still think there's some opportunity. The -- and finally, we're going to get more linear in the way we do it -- we go about our business. We are manufacturing now on a linear basis. A lot of the back-end loaded quarters and the back-end loaded years that you've seen from NCR in the past were somewhat self-inflicted. And they're not helpful when it comes to a cash cycle. When we get more line in the way that we sell and the way that we build and the way that we buy, it's going to make it a lot easier for us to generate cash flow in more quarters and not just a singular month of the year. On the other side of the page, then there's our redeployment priorities. I think these are well understood. I don't think they've changed very much over time. What I will tell you is we won't hit the high end of each of the ranges in the first 2 rows. The trade-off between organic growth and acquisitions is one that we think about quite frequently. Many of the acquisitions we think about are make buy decisions. And if we were to fund growth externally, we might run it, rain in CapEx internally. And similarly, if we don't find the acquisitions that we want, we will spend more to drive our own product development. But -- so we would might overspend our depreciation, I'd say here, $0 to $250 million over that period of time. Acquisitions. $600 million to $800 million. These are hard to predict. They come -- it's hard to time them. Sometimes they all come at once. Other times, the pipeline is relatively dry. It's often hard to align expectations for sellers. With expectations for buyers, and they tend to come together seemingly all at once. But the pipeline remains strong. We're looking at a lot, and Mike has described in the past, what we're looking for. The stock buyback, $100 million a year has kind of been our pace in cadence to offset the dilution from compensation programs. We'll continue on that path. They've kept it a little bit higher here. I'm hopeful that we'll find some of the converts that we'll be able to buy back as well that I'd put that into that number. That's an opportunistic buy. And when they're available to us, we'd like to buy those back. I also called out 2 legacy uses of cash here. We will have to fund our underfunded pension over this period of time, I think, to the tune of $300 million to $400 million. We're working hard on that to try and get that number lower. But think about it being a use of cash over this period of time, [ $3 million to $4 million ]. And then discontinued operations, primarily an environmental use of cash between $100 million and $150 million. So about $2 billion of cash to put to work and we'll do so in a disciplined manner. The next chart is our debt stack. I'm not going to spend any time on this, except to say, we don't have any refinancing, some major refinancings to undertake until 2025. And in 2024, we have the first date that our converts can be put back to us at the current stock price and the current coupon, I suspect, no one will be willing to put them back. We'd like to take them back. And the 2 dotted lines represent revolvers or asset-backed lines that ought to be very easy to roll forward. So in closing, 5% revenue growth, a very different mix of revenue growth, a very powerful and profitable mix of revenue and hopefully, more sustainable because of the sources that it comes from. From an EBITDA margin perspective, having pulled over then those sources of revenue, a very profitable revenue mix, and a profitability stream that ought to be more sustainable and more repeatable. From a cash flow perspective, we'll generate a lot of it. We'll put it to really good use. And then finally, when all said and done, our 80/60/20 mantra, we'll have to change it because Mike, we will have accomplished it. So with that, that's my report. Over to you.

Thanks, Tim. Great job. Digging into a little more detail, particularly around as you call on the subsegments, give me a little more clarity on the sum of the parts. Owen, thanks for [indiscernible] today. The roundtable that you just got done before, Tim, as that was phenomenal. Adrian talking about how he's continue to take out costs in the lean factory, high-quality, but more efficiency, take out the cost. By listening to Tim, he looks like the software kind, really phenomenal not becoming a software company, but we are a software company, we're able to deliver software. We're building software, and it's clear to see why with his leadership. And then I tell you, listen a minute you talking about what we do in professional services, which we don't always talk about, but how germane and how valuable we are in supporting our customers out there. That was a great session.

I think that the level of discipline and focus in the company right now is pretty dramatic when you compare it to just 2 years ago. And like we keep saying the customers are validating. I think your favorite expression is happy customers buy more. And that's what we're seeing. And I think that's why we have confidence going forward because the customer base is really validating that the actions taken by our leadership team are sustainable and have been impactful for them. So it's great.

Yes, that was great. The business unit session that you ran. Just going through and looking at where we are, you look at restaurants, the fact that we've got our product out there. We've addressed the contest issues, and Dick's going to start growing next year. I mean, those are a great story around Aloha and the restaurant business. On the retail side, when you put in perspective, the changes that we see as consumers and how that's going to drive a refresh cycle for the technology that the retailers have to use. I know David did a great job of communicating and sharing how we are going to be positioned with our current installed base and the scale that we have to really participate and win in that upgrade cycle. And then on the bank team, I'm a little surprised that Doug -- Frank didn't call out the win that we announced yesterday with Wintrust.

Yes, Wintrust. Yes.

$44 billion bank holding company signed up for mobile, digital banking, and the channel services platform to do all the integration with their brands, really transform their retail bank. So I guess they're just a little humble or shy or...

I haven't been sitting there in that group. I think the point you're making, the competitiveness of those general managers and the whole team is really fun to watch, and they are out there competing. They each know who their competitors are. They each know who our investors are calling out in terms of players in each of the spaces. And they have the bit the mouth. They're going to go out and beat and win in the marketplace, and that's going to be fun to watch.

Yes. $44 billion bank, you'll pick those up every day. So that a great win for that whole team. So we've got a slide up there for a number to call in with your questions. And while you're signing on to that, I'm going to turn it over to Frank Martire, our executive chair at NCR, and just ask Frank to share a few words on behalf of our Board of Directors. So Frank?

Thank you, Mike, and hello to everyone. Good morning. On behalf of the entire Board of Directors. I want to first thank Mike and his team for the excellent job they've been doing and the fact that they positioned us so well for Q2 growth. We have a commitment here to share our vision, our strategy and culture, and we've executed on that. And that is much appreciated. That's the first point I wanted to make. The other is we've had significant progress in the last 2.5 years and was thankful to -- again to that team. We are again well positioned for the future. And then our Board has been extremely engaged with the executive team. We work closely with them, and we're very, very part of the result we've gotten together and the job that has been done but in my on -- and again, the management team and the entire organization. So when we look at this, the strategy is clear, and it positions us extremely well to maximize shareholder value. I want to thank you for taking the time to be with us today. We really appreciate that. We very much appreciate the confidence you have in NCR. With that, I'm going to turn it back over to Mike for Q&A. Thank you.

Thanks, Frank, and thanks for joining us. Today at our NCR global headquarters here in Atlanta. Again, we wish you all could have joined us in person, but hopefully, you got some value out of this virtual session. The goal today was clearly give you a sense of the progress that we've made. The progress we made becoming a software and services-led company, the progress we've made on moving our company forward. And then most importantly, give you a sense of how the various sum of the parts at NCR really create a tremendous amount of value in the company. We firmly believe Tim and myself, the whole team, that the sum of the parts as you add it up, create a really compelling investment opportunity with the NCR, with the NCR brand, with the NCR company. And we think that because as you go through the components we laid out and you look at where we are vis-à-vis market, our competitors, other organizations out there that you might comp as to we are bigger in digital banking than Q2. We're the #1 sales leader in global ATMs. We're the leader in global POS enterprise software, much larger, much more scale than a GK software or a Lightspeed. We're the leader in self-checkout solutions, the hardware and the software to run self-checkout. And we are the #1 provider of restaurant POS technology to run the restaurant, bigger than Toast empire combined. And when you look at what we do and what positions the growth in retail and hospitality, we are attaching a payment transaction to everything that we do going forward. We've made a tremendous amount of investments in the last 2 years in our products, that we use to run the restaurant, run the store and run self-directed banking. And we believe firmly we're on the right track to continue to grow to hit their goals of 80/60/20. Again, thank you for joining us today, and we'll start our Q&A promptly. All right. Well, so far, I think our lives showing pretty well. A few transitions, people moving off to the 2 stages. But hopefully, the message has come through as we've gone through this today. You've got the dial in number. I hope this start works. We're going to open up the lines and give people a chance to ask us the questions, and we will -- we'll do the answer. So with that, operator, if we can open up for the questions.

[Operator Instructions] And our first question we'll hear from Tim Willi with Wells Fargo.

Mike, Tim, Adrian. Great program. Thanks for putting this together, great information. A couple of questions across to the businesses, just starting with digital banking. I'm curious now that you sort of clearly put us on a growth trajectory and moved it forward. There's a lot that's going on sort of in digital banking overall. We've got lending and we've got small business and B2B type stuff. It's -- how do you think about those opportunities now that you can really look forward on this business as opposed to sort of shoring it up as you have? Just a thought there. And then I got another 1 or 2 quick follow-ups.

Yes. Thanks, Tim. That's a great question because I think I mentioned it when I opened and did a brief overview on banking. It really is -- so digital banking really is retail banking. That's what we as consumers really think about today. So I think what your question was referring to. So as you look at expanding the scope of some of the things that we offer, we've added an origination components. But whether it's lending or whether it's some more account opening technology. Clearly, whether we build it out on the platform that we have, whether we partner or whether we look at some acquisitions, I think we definitely would be interested in continuing to expand and really try to grow share of wallet with each of those 24 million accounts that we have today.

Great. And then one on self-service and then hospitality for the self checkout in the retail channel. I know as consumers, we sort of -- we scan our things. We put -- we put the card and it's sort of like a dumb machine, I guess, to the consumer in terms of how we experience it but obviously, large retailers in the front of the store is very complex. Environment is sort of pivotal to the customer experience, right? Now we like stand in mind, everybody wants the missions to work and things of that nature. So when you think about the value-added services that can come into the front of the store as self-checkout grows in your professional services organization. Could you maybe talk a little bit about what that opportunity is as opposed to just putting machines in place, making sure they work in servicing them, whether data or services around the customer experience. That you think enterprises leap?

Yes. Tim, I think that's a great point. So I know both Mithu and David talked about that. So in the retail space, it is, and David's strategy although it's a component, an appliance, a unit, a piece of hardware, a software, and it's that user experience that differentiates what we can do for a a customer that delivers to their end user. And then Mithu got up and talked about what we're doing in potential services, the ability to add that value, and it's pretty straightforward. So if you're a new -- if you're a retailer, a grocery store, and you're adding self check up for the first time, you don't have that expertise in how to do that. So Mithu can come in with people who have done this literally all over the world and help design the workflow, design the process, how do you do the lanes from self-checkout to assist it and really help with that whole experience. And so I think that's a it's an excellent point to make. It really ends up being the software and in that self-service model.

Great. And then my last one, and I'll hop back in the queue. I was curious, Tim, in your slide, you talked about pricing, I think, in one of the revenue bridges. And I guess, I could definitely see that in certain parts of the NCR enterprise. And 3 is in hospitality. With all that's going on and the pivots you've helped restaurants make on the products and the development that's going on. Are we just sort of looking to that channel staying away from checkout and ATM. Is there an opportunity for yield enhancement? I don't know if you want to call it, price increase or just yield enhancement in that area where people really recognize probably more so than ever, the value that you've brought into the organization in a very tenuous time to help them pivot survive. And on the other side of this probably thrive. As opposed to how they typically got the relationship they might have had with Aloha NCR before the pandemic hit. Maybe to be for granted, but now they realize you're a pretty trusted partner around stuff. So I'm curious your thoughts.

I think that's exactly it. It's the content that we're going to add. It's much more profitable than the content that preceded it. And when we start to sell differently, we sell the services and software as a solution to the customer and we get away from just pure hardware sales. That's absolutely the way the business is going to move. And so you see on that -- on the retail chart, it's a pretty dramatic expansion in margin rate. And that has everything to do with starting at a lower point because of a pretty precipitous decline in revenue. But more importantly, as the revenue comes back, it's coming back in the right places, is coming back as very value-add revenue, and it's coming back as recurring revenue. So yes, I think all the functionality that Dirk and his team have added during this period of time make us a far more attractive product set and make it far more likely that people adopt the entirety of his Essentials package.

We move to Dan Perlin with RBC Capital Markets.

The first -- I just have a couple of questions. The first one is when we look at the long-term financial objectives, kind of the 5% CAGR, 6 points of margin expansion and so forth. Should we expect all else equal, understanding not calling the pandemic's recovery or getting worse, but else equal, should we expect that cadence growth to be similar to kind of the cadence that you mapped out, Tim, around the recurring model slide so in other words, it's more linear, it's more gradual, but I'm just trying to understand how that cadence pace might look from here?

Right. So I think if you look at the demographic, I think, was on margin rate. And that is an important pace -- important pace of how much you improve margin rate. But really, there's a lot of -- about half of that margin improvement comes from cost out or cost efficiency. So as we continue to grow keeping our costs growing less quickly than revenue. That can happen earlier in the model. And that can support margin rate performance early on. The transition to recurring revenue that needs to take place in each of the retail and hospitality businesses that's already well down the path and it's getting good momentum on the banking side. That will come perhaps a little bit later, and you saw that in my graphic, right? The switch over in late 2022 will give us some boost to margin rate there. So I'm anticipating relatively linear improvement in margin rate over that period of time with the early going coming from cost efficiencies. And then later in the model, the shift to recurring revenue, more valuable revenue streams picking up the slack.

Okay. That's helpful. One of the things that was brought up today was ATM as a Service, and I know this is maybe not the the focal point of the day, but I also want to understand how do you handle the carrying cost of the ATMs as you kind of pivot that to an as a service model, there's a -- would seem as though there's going to be some sort of upfront costs that you guys would have to bear in order to kind of put that into the model. So I just have maybe a better understanding of how that gets recognized over the course of this horizon period?

Yes. Let me just start on that one, Dan, and then Tim could kind of add a little color on some of the financing aspects. But -- so if you look at the chart that Sean Phillips shared earlier, and he did a great job of showing that one of the big benefits of doing ATM as a Service or literally, he talked about outcome-based. An outcome-based business where we're actually delivering a transaction on behalf of the client. We today participate in a portion, we think about 35%, maybe 40% of the total spend to deliver ATM transactions to the end customer of a bank or credit union. So we do the hardware. We do software. We do the break fix services. If you start to expand that to the managed services to help desk, you expand that to be managing the software, the software stack, the delivery, the CIT. There's a whole other broad set of services, whether it's driving or switching transactions on the back end that we don't necessarily deliver today. When you start to move to a higher value service like ATM as a Service, you expand that share of wallet? I think Sean's chart show that it's about at least 2x in terms of total spend that we have access to then participate in, which we think could give us, a, it shifts it to a subscription-based business but b, with a larger addressable market to give us some growth in that market. So that's part of what's going to happen with that business. And then as we look at growing that, obviously, you're going to look at -- you're going to put some assets to work. And Tim's worked with the team on how do we find our finance. Tim...

Yes. We had a meeting with Frank and his team to talk this through. And the pricing model, as Mike just described, is so compelling that these things start to fund themselves after not too long. So we're about 2 years into this model. Maybe we need to invest $40 million to $50 million on the balance sheet to carry those assets. And then ultimately, this thing starts to fund itself and it doesn't draw much cash after that. The other is, as we start to have these machines be out there with much longer revenue streams against them, contractual revenue streams against them, they become very financeable assets. And as they sit today, there are machines that are mildly entertaining and perform a function when they have a revenue stream against them, and they throw up a predictable yield, in essence, I think they become very financeable and whether we decide to just to fund that growth ourselves. Or in fact, somebody else. I'm not worried about that constraining our growth in that pick of business.

Yes. That's a great model. One last one real quick. It was also brought up earlier the Aloha Essentials bundles kind of doubled the ARPU when you switch clients over. Can you just help us bridge how that actually takes place and maybe some of the mechanics on that?

Thanks, Dan. Yes. So the Aloha bundle. So what we do -- Dirk did a great job. I think, Dirk uses a wall-to-wall or end-to-end delivery to a restaurant, you walk into a restaurant. And literally, every piece of technology wrapped all the software front and back, whether it's the hardware, we have the added advantage that we can deliver all the hardware you need, whether it's lane busting and the drive-thrus, whether it's a point of sale, whether it's at the table side, and back into service in the kitchen. The unique benefit that we have is we can drive all that straight through with our technology, but then other aspects of it that we may not do today, and we are starting to do more and more for restaurants, whether, again, it's turnkey service, whether it's helped us for a franchise chain that wants to have somebody. Mithu and their team have gone out with change to do a refresh and literally stamped out an exact copy at every single franchisee that they have, not only the software, but the service model around that and the hardware model around that. So that just starts to expand. I think Dirk would say we get maybe $0.35 and $1 spent today in restaurants on average. If he can get $0.50, $0.60, $0.70 per dollar spent, that will expand his ARPU. So he continues to look at different products, he can plug in, more services he can deliver. His goal is really straightforward, add more sites and then increase share of wallet for each site that we have.

Mike, the only thing I'd add to this because we just touched on it with ATM as a Service. The same is true with what David is doing in the retail side of the house. The product is aligned to meet that subscription-based offering to the marketplace. Behind the scenes, quite frankly, the ability to sell that. It's a completely different sale than a hardware transaction. So we're out there, essentially asking the restaurant, the retailer, the self-service bank owner to give us the technology responsibility. That's a different conversation. So the GMs, Dan Campbell, who runs our sales organization, has completely rebuilt the sales organization to be able to go out and have those conversations to sell that value-add packaging offering. And as you touched on what Mithu is doing, we've got to be able to put all of that together out there and have the customer believe that they are getting incremental value. So it's even beyond the sum of the parts. We're going to take that responsibility and are taking that responsibility. It's a different cell, a different implementation, a different support and when we talk about the last 2 years of getting the organization ready for this, it was not just the product architecting. It was getting all of the other pieces in place and I think that's where we're very comfortable that we're moving in the right direction there.

I think that's a great point. When you add a payment follow that, we make it a lot simpler for those restaurants to operate their business, they can focus on their business. And then, quite frankly, make it easy for them, right? So...

And next we move to Kathryn Huberty with Morgan Stanley.

I think we all really appreciate the disclosure around growth segments, but you also spent time today talking through the benefits of selling outcomes that require multiple parts of the business, the benefits of shared services in a more centralized go to market. So I guess the question is, is it even possible to separate out parts of the business to unlock some of the parts? And if the answer is yes, Mike, how long are you willing to give the team to execute and the market to more fairly value the business as a combined entity before you would consider any strategic alternatives?

Yes, Katy, I think that's a great question. Obviously, the whole team here is focused on as we do annual strategy session with our Board. And we have very detailed conversations with the Board around how do we unlock value, how do we create value for our shareholders. I would just say, so hopefully, today, you get a sense of the progress that we've made over the last couple of years. I think we use the words like we've fixed some of the components. I think Owen talked about, we're, in some cases, in the starting gate now where we're turning them around. We turned digital banking around, so digital banking's back to growth in 2020. We've turned the hospitality or the restaurant business around where it's going to go back to growth in 2021. We've got a strategy and the game plan for the ATM footprint where we can get predictable revenue streams and making margin off of that. We've got a great plan in the retail business, which we think is going through an upgrade cycle, where we've got a new product, the cloud-based product that we think is going to win in the market. That's going to drive growth. So I'd say, versus 2 years ago, when we talked about strategy and vision. Today, we have products in the market. We've realigned the business. We've gone back out to market and our go-to-market strategy and how we we deliver products that we sell, how we price them, that we think will drive that growth we outlined today. So I would say I don't think we're going to have to do something. Would we be willing to do something, we would entertain that, obviously, as the executives of the company, if that made sense. I think we've got a great opportunity. And we tried to share a little bit about how do we get leverage out of our infrastructure, how do we get leverage out of the team that Tim Vanderham has built on the software and the business services platform, channel services platform, so the platform architecture, get reusability. We get transactions going through. We start to get click fees and the more volume we can push, the more transaction fees we can get on those services. We talked about professional services and how that makes us different. We've talked about the scale and the scope of what we do in the lean factory. So I think we feel really good about being able to provide that transparency to the marketplace on the components, but show you the overall value someday down the road, if we've delivered on all the things we've said today, rolled out the products, we're winning in the marketplace, and we're growing. And the market is not valuing us, we would sit back and say, we really need to look at how to do that. But right now, I think we're really, really, really confident that we're going to execute and the market will value us appropriately in the future.

That's great. And just as a follow-up, Tim, it was explicitly said that hospitality would return to growth in 2021. Do you also see the potential to grow in the banking in retail businesses next year? And then just as a follow-up for you, what would you say are the biggest risks or the sort of most difficult efforts in reaching the the 2024 target? Is it more so on the revenue side or profitability?

Yes. So to answer your second question first, I do think that revenue is always the risk in a growth model in my mind. I know we can control our cost. I know we can generate cash I know that our shift toward more recurring revenue will occur. But the question is, how dramatic is the growth rate behind that and some of the businesses where we're going to generate some productivity volume always helps, right? So that would -- it's kind of a 2 fold, if you can get that. We will control the cost. We'll drive cost hard. We'll wait for COVID to be over. I don't know if it's over next month or it's over 6 months from now, but we're ready, we'll be ready for it when it gets here. And on the retail side, the backdrop for retail is pretty positive as well. We certainly expect that business to grow at least as quickly as Dirk's business. David has, the wind is back from a SCO perspective, which will allow his hardware business to have a little vig here in the next several quarters, probably the next several years, but he has a very same phenomenon behind his business around a transition to much more valuable revenue streams and a deeper relationship and a deeper financial model when it comes to our customer set. So yes, I -- and I think we showed that on that page that he is going to grow well. His growth rate is a little bit above the company average in the model. Remember that the hardware is going to drive some of that early, and then as we get out beyond that the hardware will -- the growth will kind of level out at a nice level, but -- and more of a linear path and the services will take off after that.

And what about banking next year? Is there the potential to grow off of easier in comparison?

Yes. Yes. So let's take it into 3 pieces, right? You've got the the hardware business. I don't -- we're not going to plan for ATM revenue to be up next year. A report we saw just the other day suggests others are starting to agree with us at this $900 million a year for us or $220 million to $250 million a quarter of hardware sales are what we should expect, and we'll scale our operations, our manufacturing operation to that level to make sure we can and will be profitable at that level. So I would expect profitability and ATMs to get better next year, revenue will not be the driver. I think the -- on digital banking, absolutely. Remember that digital banking wins take a little while to come into the revenue stream, probably about 9 months. And we do have some wins back in 2019. We're starting to see now and some 2020 wins that will help us in 2021. So I expect that business to grow nicely as well. And then you've got this nice business in the middle of the software and services and banking. That's big at $1.7 billion that grows it a little bit like a GDP-plus grower every year, year after year. It's there for us. Or the professional services revenue we can pull-through there actually has accelerated during COVID as they need more of our help to make this transition to digital. So yes, I do expect banking to have a good year next year. And to your point, the comps, particularly as we get through the -- into the second quarter, the month of April being an awful month, we ought to be able to post some decent increases.

And next, we'll move to Dan Kurnos with The Benchmark Company.

Great. And obviously, I'll echo everyone's sentiments around the detail and disclosure provided here, very helpful. If I could just follow-up on an earlier question on this obviously prevalent software first theme. And really focus on kind of pause and hospitality. It obviously, used to be a hardware first. Hardware is a sticky component of the equation, software more portable depending on who offers the best fleet. Obviously, the competition is still selling it in that way to a degree and give away the hardware bundle the rest. But do you think the dynamics have changed there or that you can win with the software lead how much of the payment at cash help that argument?

Yes. I mean, I think that whole business and certainly in the SMB side of that business is very much a software-led business. You win in feature function. And I think it's a service-led business, you've been an ability to install, support, service those customers. So I think the strategy that we have and that Dirk's outlined in terms of bundling into Aloha Essentials and then getting out in the market with our with our delivery and our support team is really right on. I think we've got other competitors who are doing that. And again, we have the capability to bundle the payments as well as what other people are doing. So that ability -- it's just simpler. If you're a small restaurant or you're a small chain with that 10 -- 5, 10, 15 restaurant grouping, table service restaurant grouping, you want somebody to come in and just take care of everything for you. You don't want 4 or 5 different vendors. So we think that's the model. We think it starts with differentiating on the software product. We think the service is a big, big part of it. To be able to do all those components straight through with the payments and then pick up the phone and take care of an issue. So yes, we think that's where the market is going. And as we said, we've made a lot of investments in that, not only the product, not only the software, but also in how we go to market, our ability to service, our ability to support our customers, the integration with payments. And going into 2020, we expect to start to get that growing again.

Great. And then if I could just follow-up on my own question there. As you see more success with payments, do you consider going deeper down the capability stack or possible cherry-picking one or more pieces of it to enhance our take rate? And I guess, maybe if I could just expand that to the service offering back outside of payments and scope and we gave a pretty good answer there already. Are there any particular areas you feel you could add to or do better and specifically that can augment growth beyond logo wins and wallet share expansion with your existing portfolio?

Yes. Tim referenced our M&A, and we talked about the level of spend that we might do on an annual basis. We put that on hold a little bit earlier this year when COVID hit I think on the second quarter earnings call, we talked about getting back in the market and looking at companies. Tim referenced, we have a pretty good pipeline. But if you just -- the simple way answer to that is, if you think about our strategy to run a restaurant wall-to-wall or run a store wall-to-wall. So we say, run, we literally mean we want to make it easy for a restaurant owner or a store retailer to take care of their business and let us take care of the technology. So if you start to look at things we don't do today, and whether we would partner and integrate and deliver that as a bundle or whether we would acquire and integrate a product or a service, clearly, that's part of our road map going forward.

And next, we'll move to Ian Zaffino with Oppenheimer.

I just kind of want to follow-up on that last question. As you try to move more to as a service, I know you touched upon the smaller customers. But how does the discussion look with the larger financial institutions? And then maybe also at larger hospitality customers as you try to do that and also retailers well, what sort of the value proposition to them? How do they see it? And then also just more broadly, maybe you could touch upon the IOR to you guys as a service versus what you've been doing historically?

All right. So I'll engage all 3 of us on this question. So I do think that's a very good point. So as a service or running the restaurant, running store, running self-corrected banking. If you're a -- I'll say banking, community bank or credit union or even a regional player, you might have more applicability, more desire to use the leverage that we can bring to you is a leverage model, right, where if you're a community bank, we can bring you the digital banking platform. We bring you, you can't get any other way but to get a provider like an NCR, that leverages that across 650 different institutions. So that clearly, that market, and that's what we're seeing with ATM as a Service, the community banks and the credit unions, they look at it and say, wow, this is a much better way for me, make it easy for me, predictability and a much lower cost stream, as Sean pointed out. As we look at bigger ones, all was go into share. We were a little surprised that some of the size of institutions that actually asked us specifically about that product over the last couple of years.

Yes. It is interesting because I just stay with the financial industry right now, what we are seeing -- we've been asked this question a lot relative to what's going on in the ATM space. As Mike said, digital banking is retail banking. And what we're seeing is an investment from our customers into that platform to support digital, their branch and their distribution through the ATM, ITM network. And when I look at the transactions, whether it's for a P&C or U.S. bank, and what they're investing in to put product platform in and who they're turning to for support in that effort. It's our software team, it's our professional services team, and those are long-standing engagements. So they're not just onetime implementations that are ongoing relationships relative to application management and outsourcing. So as we look at the solutions for our various industry groups. Our entry points can be anywhere along the continuum. And what we're challenging our teams to do is to come in, find that entry point, make sure the full story is understood with our customers and then move left or right along that continuum. And we're getting a really strong receptivity. We mentioned Chipotle this morning a couple of different times. Again, in the retail space with folks like Northgate and Bashas', they are clearly looking to us as a partner to outsource and do so on a sustained basis. So we think the strategy is playing out as a service. And again, I go back, it's not just the software product. It's all the attendant capabilities behind it.

And the IRRs are high. They have to be, right? It's a sticky revenue stream. It's recurring revenue. It's higher profitability by the nature of the relationship with the customer. And the question for us is how do you make sure that it is a IRR, you need to make sure you don't overpay for acquisitions. You need to make sure that outside world expects multiples that are too high, Tim Vanderham can go build it for us. And Tim will try to get done as fast again. We have a nice trade-off there on IRR, but we push back very hard sometimes on the valuations that we're seeing in the outside world, showing us some of that functionality. We always have the option to go do it internally. We know he can do it at a reasonable cost.

And next, I'll move to Matt Summerville with D.A. Davidson.

A couple of questions. First, can you maybe talk about the data of the side of the business, $1.5 billion to $2.5 billion you highlighted earlier? If we think out looking out 5 years from now, what would you view as your sort of target capture rate on that $1.5 billion to $2.5 billion? What's a realistic conversion there over to NCR?

Yes, Matt, it's a great question. So we tried to share a little bit about where we are with payments. And if you recall, we entered into payments about 2 years ago, and we bought a business that was really a card-not-present business, where it was mostly online payment. We actually kind of liked the ability to do that and which is actually going to work quite well for us now. And then we had to migrate and build out some of the capabilities to card-present at a restaurant or out of store. So now we have the capability where it can be either and we go talk we're not going to try to compete on price. We're going to compete on the integration with our products, with our POS software, whether it's on a retailer or at a restaurant. We're going to compete on the ability to take a payment, whether it's at the restaurant at the table, as Dirk pointed out, or online. And then the real issue is not taking a payment. It's when something goes right, the delivery arrives and the foods incorrect, and you have to credit that back. So we think our integration and the product suite that we've built out is going to be very much differentiated. When we go to market, we're going to sell that as a bundle. We try to give you a size and scale of the opportunity. That $1.5 billion to $2 billion, we think is a pretty good estimate of this -- the number of dollars that flow through our POSs to flow through our enterprise POs and our gateway today, our connected gateway, connected payments gateway. And then -- so that's the amount of money. And then we apply a rate the BPs that we can get on intertain fees against that. We're not being super aggressive on adoption rates, so we say 15% to 25% we can get. We'd love to get more. We know on the very high end, they're going to be a little more price sensitive. It doesn't allow us to make that much money. On the low end, we don't give them a choice. When Dirk's out and sells Aloha Essentials, it comes with payments. And the uptake. We've shared that the last couple of calls, the uptake, the adoption rate, the connect rate has been very, very high. So payments for us is a little bit of gravy. We think if we're going to start that transaction, we should complete the transaction, we should get a click fee, and that's going to be a high-margin business, and it's going to grow incrementally every year for us

Or 12% to 15%. I think 25% -- there's a difference, right? On new customers, we expect the attachment rate to be very, very high. On existing customers, the transition will be a little bit slower, but when we hit the numbers Mike described, we'll beat the numbers on the page we gave you.

Got it. And then another follow-up for you, Tim. The $2 billion in free cash flow, you talked about sort of cumulatively generating over the next -- over the planning horizon out to '24. I want to be clear, does that include or exclude what you will need to put into pension and environmental-related?

That is gross. So there -- I included those 2 pieces for pension and for basically environmental on that page because we would have to take those out. We've not given up on getting the pension number lower. And we certainly hope that we'll be able to manage that discontinued ops number a little bit lower than that, but we will have to address those out of that $2 billion.

And next, I move to Kartik Mehta with Northcoast Research.

Mike, I think you've somewhat answered this question, but I just wanted to understand a little bit better. You talked about ATM-as-a-service business. And I'm wondering what percentage of customers or dollar volume can get to that? Because I'm assuming there will be some large banks that will hesitate or cannot adopt that technology. So I'm just wondering, from your perspective, what percentage of the market do you think you can capture with that service?

Yes. I mean it's going to vary by geography. It is clearly going to vary by tier. In the U.S., going to get 5 or 6 really, really large-scale banks. They have the scale and the infrastructure. It's interesting because even at the very large banks. They look at some things they do and they say, you guys might be able to do this better. We don't count on those as making that transition. The community banks and the credit unions are on the very small side. We do think that's going to be the predominant marketplace going forward. And then you've got the regional banks in the middle, some, which will look at this and say, we know we have to offer the capabilities to do a transaction on a branded ATM, either at our branch or off-prem, but we may not want to do it because we think NCR can do it at a better cost structure. So I think that market is going to start in the low end. I think it's going to move up to the midsize. We're seeing that in different parts of the world, Australia, we've seen it in parts of Europe. We started to see that where there's a preference to go to that. In some cases, starting with the off-prem ATMs as a financial institution saying, you take over my off-prem fleet of ATMs. So it's going to be different by geography. It's certainly going to be more prevalent in the lower end of the market, but we look at that, and we just say that's going to be, again, as Tim pointed out, it's much more sticky, a long term subscription. And we think the margin and maths is going to be stronger for us going forward.

And then to Tim, you talked about the $125 million to $150 million run rate cost saves. Of that, how much will be taken out in 2020? So I guess, what will be left in 2021?

All of that cost will be out by 12/31 and it will be built into my expectations for our business' budgets going into next year. So as far as 2021 goes, we won't stop. There's plenty of productivity to be had. Our focus will shift away. I think that $125 million to $150 million looks -- is more associated with indirect costs, some overhead layers or indirect. You get into 2021, we ought to be able to go after the manufacturing footprint a little bit harder. Adrian has already pulled up some pretty good ideas. And so we'd be hopeful that we could generate yet more savings in 2021, and we'll talk about those as we get there and start to plan for 2022.

So fine point on -- so that is out by the end of this year, but we said to -- the people you saw today, the business unit heads and the delivery teams, all our infrastructure teams. We said let's get the cost out in 2020. We started the year, we said we're going to take $90 million out. We ended up doing a little bit more. If you look at the impact of us on COVID and where we think we're going to be in '21, we just felt we need to take a little bit more out. We said we're done at the end of this year. We want you to focus on growing next year, everybody driving business, everybody driving customer sat, focus on that. And then Tim is going to work with Adrian and the team, and how do we get more efficient at our service delivery, how do we get more efficient at our hardware cost structure. So everybody else is going to grow -- focus on growth, focus on customer sat and we've got a part of the team that's going to focus on taking out some additional costs in '21.

And next we go to Paul Chung with JPMorgan.

So just on free cash flow, can you kind of expand on how you've been able to smooth out seasonality there? If you could expand on collections improvement, manufacturing improvements and anything you want to highlight? And how have you been able to kind of implement this so successfully this year after years of seeing a typical 4Q surge?

I am the beneficiary of the work that Owen did. So I'll let Owen describe the cash control tower that's put in place in April or right at the outset of the pandemic.

Yes. The cash control tower that Tim refers to is what we stood up, and it was really to look at cash preservation this year, but I have to say the work over the last 18 months, whether it was in the manufacturing environment, combined with the sales team, making sure that what we were doing were -- was getting more tightly connected between pipeline opportunities, the manufacturing efficiency, the coordination of the supply chain, et cetera. So working raw materials, working our finished goods, getting a better billing cycle. We're starting to see the recurring revenue, allowing us to bill on a different basis. All of those disciplines is really what has cumulated in the performance of free cash flow. As Tim points out, the collections, you can only collect receivables to some extent once, but it's all the other things. What we've done with our suppliers in terms of accounts payable and managing the entire working capital cycle. So we think it's -- we're comfortable with sustainable, the idea of how we were selling in the past. We had a lot of blue light specials on hardware. I think our customers were used to the idea that at the end of the quarter, if they held out we would give them a discount. If you saw what was happening in the manufacturing environment, then everything was getting built at the end of the quarter, everything was getting billed after the quarter. That discipline has -- being cleaned up, has allowed us to get to what we feel is going to be a much more linear rhythm to the business and obviously impacting the free cash flow.

Yes. A lot of that back-end loaded performance is self inflicted, right? We live that way, and it's hard to get off of that drug once you're on it. Once you've run really hard to the end of a quarter, you come into the next quarter and the coverage dries and you've not inducted anything in your production lines. And there's nothing this build because you're too busy collecting. We're breaking that pattern. We're not going to do the unnatural timing stuff any longer. We're going to make sure that we stay linear in everything that we do, and then we don't generate all of our cash in a singular month. Because look, it doesn't do any good if you get it all one month, you still have to fund the deficit all year long. So I'm very pleased with the linearity. I'm very pleased with the process I picked up from Owen. It's great. We're down 6 days in our receivables in a single year, in a year in which it should have been lot tougher to collect money. So taken all together, you've got raws -- raw material inventories are down, and Adrian's done a great job there. Our finished goods are down because we're manufacturing closer when our customers want to install their products. It's -- everything is moving in the right way. I think we'll still have some room next year in inventory. I think receivables days, we can sustain the improvement. And as you saw in our cash charts, we don't expect to have to use a lot of cash to fund that growth from a working capital perspective over the next several years.

And that will conclude the question-and-answer session. At this time, I would like to turn the call back to Mike Hayward for any additional or closing remarks.

All right. I'm going to invite the whole team up on stage here with us. So Mike and Tim and Owen get to be the face. You saw a lot of the other managers. I'm going to ask them all to come back on stage. I think they did -- and hopefully, you agree they did a phenomenal job of representing and sharing with you what NCR is all about. And literally, how we deliver to our customers every day, how we focus on taking care of our customers and how we're delivering products to the marketplace. Again, this looks like it's simple, right? 2.5-hour live show, but the whole team did a phenomenal job. Cameron get up here. The whole team did a great, great job of making this happen. So appreciate everybody who was able to join us today. Hopefully, you found the level of detail, a little more transparency, a little more visibility. And ultimately, it's about the progress that we've made. And quite frankly, it's really about the group behind us, the whole team here at NCR and the commitment and drive that everybody shows each and every day to make this work. So again, thank you for joining us today.

Happy holidays. [Presentation]