NCR Voyix Corporation (VYX) Earnings Call Transcript & Summary

Yes. So welcome to our next session in our Fintech Conference. I'm Ryan Potter. I'm glad to have NCR here. We have Mike Hayford, CEO. Thanks for joining us.

Thanks, Ryan.

Yes. So I guess before just getting into demand questions, we can just kind of start with a high-level question of the competitive environment. Can you kind of go through like each of your like 5 major offerings and how the competitive environment has evolved over the past couple of years and where -- your composition right now?

Yes. Let me -- I'll start on our software tech platform side, which is our Commerce and our Digital Banking and just kind of talk to where we're positioned, and then I'll move over to the ATM side. And I'll probably give context of both our products and also the macro environment, which I think is our work domain for NCR, moving, making the transition from a hardware company to a software-centric or software -- we call it software-enabled services company where we're delivering differentiating software but we're delivering it as a service across the board. So if I -- I'll start with retail, because we have some of our team members here that run retail. So retail, so thinking about retail, literally, every retail entity -- we're very heavy in big box, grocery stores, convenience and gas stations. So that's kind of where we play, so a segment of the market that really, quite frankly, wasn't really impacted by the pandemic. And as you look at the trends, particularly going forward, they're very resilient to any impacts in the marketplace economy based on the forward look. So what we've seen there is a change or a shift with how they have to address to their customers. If you think about just a simple grocery store in the days of old, people self-picked and then you assisted them on the cash register to check out at the end of the day. That whole world has changed. It changed even more dramatically during the pandemic, where people wanted to get somebody else to pick, somebody else to deliver or they wanted to pick up themselves. So the channels and the access points have dramatically changed. What that means is your point-of-sale systems, your point-of-sale for a grocery store is like the thing that brings everything together, does all the transactions. It does all the payment, does all the inventory management, it does the product management, does all the pricing, and it does all the rewards and loyalty around customers. So that's the system that we provide to a retailer. And what we're seeing is they need to move from legacy systems to open platform cloud-based systems. So we have a product called Emerald that does that. Underneath Emerald is a suite of microservices that we allow you to integrate and open up, whether it's our product or a third-party product. So that shift moving forward is starting to take off. We've been out in the market, selling that, I believe, for about 3 years now. David, is that about right? We got to market. We differentiated and excelled on the openness of the platform, the architecture but then also the ability to actually get you up and running in a fairly compressed window, 6 to 9 months if you're a grocery store chain. So I think that market, we think, there's going to be an imperative to do a migration or shift. We think our product is positioned very well. And so as we look at where that's going, software, technology-led and then we're rolling it out as a subscription. We're starting to get a lot of traction on that side. Similarly, so we also do hospitality. So Hospitality, we do enterprise scale, which is very similar to what we do in retail. So it's large entities, the ability to integrate, the ability to install, ability to support literally wealth -- well anything in a restaurant, anything in the retailer. When you look at those businesses very similarly, it starts with the POS system. We have the most software POS systems in the world when it comes to combined retail and hospitality process restaurants. You start with that, hold on to that customer base, migrate them to a platform, migrate them to our NCP, NCR Commerce Platform and then get them attached to payments. So that's our simple strategy in that environment. It went from a challenge to get a product over the last 4 years, at this point, we have a product in both segments that competes, and we think it is winning. Our challenge now is just the backlog getting them converted to the platform. And then in Hospitality, we've made a lot of traction on payments, starting to get payments rolled into our retail base. And our payment footprint is literally on the merchant acquiring side, is we want to complete the transactions we start on POS. So we want to stay focused on that side. And then the other part of the digital Commerce side is Digital Banking. So Digital Banking, what we do is we take the front end of retail customers. So starting with mobile, starting with digital, integrating it back to what you do in a branch, whether it's service, whether it's origination, whether it's transactions at the teller line. And then tying that into an ATM or an ITM or tying that into a call center. So anything outbound that touches your customer, we put that on what we call the CSP, the Channel Services Platform. So everything in that side of the business is platform-based as well. So all the micro services, they allow you to integrate third-party or integrate our products and really serve that customer. Take that layer and then attach to -- we're attached to about 35 different cores, all the deposit, loan and customer systems that all the various players have. So that's the software platform side of our business. All 3 of those areas, we believe, are accelerating the spend trends. We believe they have an imperative upgrade or change, and we believe we have a very competitive product. On the ATM side. The ATM business, in our opinion, is just going to shift to a subscription-based business. It's been historically a transactional business. We sell a box, and we sell break/fix on top of that. We started to see this move. It was a big driver of our acquisition of Cardtronics, where, instead of buying a component and then as a bank -- city bank buying components and try to install and run it, particularly in community banks, regional banks and then internationally, it's starting to take off a little faster. We just want you to go to NCR and have you turnkey the whole thing. What it does for us is, historically, we have access to maybe 30% to 35% of the spend. So you buy a box, you buy a break/fix, you buy some software. But then you run it, you drive the transactions. You manage the switch on the back end and you manage the cash, you manage the unit. We'll do all that for you. So it increases the spend available to NCR by about 2, 3x. We've had -- we rolled it out about 18 months ago, started selling it. The success has been very strong. So we used it a big deal in New Zealand. India, we signed up a very large bank -- the Indian market is about half, the 60% is all as-a-service now. We'll be announcing very soon a very large European bank. So this would be a large bank who is looking at a segment of the population. Community banks, regional banks in the States have been very interested in it, and we're starting to see larger banks do off-prem. So I think they're up from ATMs moving to as-a-service. We couple that with our Allpoint network. It's our tertiary network. We can go into a regional bank, a community bank can say outsource your 300 ATMs, and we will add you into a network that gives your customers access to 55,000 surcharge-free ATMs around the country. It's a -- it's an offering that quite frankly, other people can't have when they try to bundle a solution. The scale, we drive 280,000 ATMs today. We're the #1 leader in selling and servicing ATMs around the globe. We have this -- the #1 software stack in terms of multi-products. So it's a scale play. It's efficiency play. We think over time, that's going to move to a high recurring revenue subscription model, and we think we'll be here in that space. So dynamics of the market plus our product, we think we feel pretty good about NCR in 2022.

Got it. That's a very comprehensive overview. And I guess just diving a little bit more into each segment's kind of demand trends and kind of starting with Digital Banking. In terms of -- you've seen growth increasing as you move through the year exiting 2022 and into 2023 in Digital Banking. So what's driving some of the increased traction? What's the opportunity for you to do more for banks? And can you also kind of discuss how the integration of Terafina has gone for you?

Yes. So I'll -- again, NCR and our product and our product competitiveness, if you will, plus in some of the trends we're seeing in the macro environment. So the competitors' product -- we've continued to focus on retention of our clients. We have what we believe is the largest number of clients on a single product, the DI product of anybody else in the country, including all the big core players. We've continued to invest in that product. We just moved it to the Google Cloud this year. So it's on the Google Cloud, opened up all the APIs, created some analytic capabilities. We've added business banking, small business banking and then some capabilities for business banking, increased capability of payments that you can drive off the back end of a digital banking platform. And so just that capability to compete is winning new accounts and doing cross-sell. You referenced some deals we've done. So Terafina, which is on the [ Salesforce ] platform, it's a great product for account opening. It uses the same technology if I'm using my digital or if I'm using my desktop and, quite frankly, in a branch. So we go out and sell it in the multiple channels and we integrate it and then we'll allow our customers not only to do account opening but to do promotions and campaigns and pre-populate all those accounts. So that is a great cross-sell. We've integrated that to our D3 product, which is a higher-end inner DI product. The D3 product, we just converted 2 large deals, 1 in -- it's probably pulling about a $50 billion bank of Wintrust, you have the other 1 associated bank in Milwaukee area, about $40 billion. So in that segment of the market, we think we have more names and more brands than anybody else. That becomes an opportunity then to upsell and cross-sell account opening. The next wave that we're starting to see banks of every size is the area that they really -- a little bit of atrophy is going back in the branches. So they're all setting down branches, but they're changing the branch and you go from a mobile or digital experience that is very self-centered. You drive it. We call it sub-directed banking. And then you go to a branch and that experience kind of goes into a different era. So what we're seeing banks do is go back to the branches. They're technology for servicing, they're technology for transactions is typically 30 to 40 years old. And they're using our platform, our CSP platform, to integrate then what you do on the front end with what happens in a branch, whether it's service or whether it's a transaction. So for us, that's where we see a lot of opportunity for growth because that consumer experience has not -- it's really good now on your mobile device. It's generally pretty good on any digital device. It doesn't translate to the branch and then the ability to push customers in a physical experience to an ATM or ITM, which is obviously something we're really good at. So we see that spend on the digital channel side, the Digital Banking side, continue to accelerate on retail banking.

There's no impact from the macro that you're seeing so far in terms of demand or like sales cycles elongating, especially on the banking side specifically?

We have not. I mean again, we've seen customers continue to embrace the technology. You've got to remember where we're positioned is we have to win in feature function. We have to win the technology. We have to win in capabilities. We have to win on the ability to go install and support them because we don't have like the back-end providers. So we are very focused on creating an experience for their customers that is different and better, and that's where we see the money continuing to go. And that, from what we've seen, hasn't really slowed down.

Got it. Let's turn over to...

Yes, in terms of just payment network, I guess I wanted to start with asking you to just talk about what you're seeing in terms of transaction volumes.

On our payment side, we did 2 different payments. So Allpoint surcharge-free network, which obviously got hit by the pandemic, got hit earlier this year when countries are slowing down. We've seen most of that volume come back. We've seen the transaction types continue to migrate for us to hire higher value transaction types. So that volume has actually been very solid. And again, we're well over the world with that product, a lot in the U.K., South Africa, Europe, Canada. And so as some of the challenges throughout the pandemic have hit, we've had to recover. So that's all coming back pretty strong. It's traditionally been a cashout kind of mono line product so you can take cash out. We've added the capabilities to other product types, deposit cash. So small business -- the community banks love that because they can send their small business to an Allpoint. Pay bills, so again, that distribution channel for that product is generally retailer. So it's a CVS store, it's a Walgreens store, it's a big box store. And so a segment of the population. A lot of our customers there are the neobanks. So Chime is our fastest-growing customer there, because they need a point of presence. We just branded our ATMs at Circle K, Chime. So that becomes their physical presence to those clients. And so those volumes are starting to pick up, starting to exceed pre-pandemic volumes. And then on merchant acquiring, again, it's all about the long game for us, is to attach it to every POS transaction in SMB hospitality. So going into a restaurant, we're running 90% plus of attach rates. So when we go in and sell to a new restaurant, we don't tell them there's alternatives. You get our payments. We're getting upsell into the enterprise side over there, and we're starting to roll it into in the retail side. Our payment side is just starting to gain some momentum.

Okay. And then ATM as a Service, I mean, is that a way for you to pull in customers you don't have? Or is it existing customers that are kind of doing the 2x, 3x that you mentioned?

I think a little bit of both. So we clearly have a client base install around the globe that we go back to and say, you're buying this stack from us, you're buying these 3 components, but you've got a ton of the components you have to do. The challenge they're having is their skill set, the resources. Again, it's a channel they all feel they need to have but can somebody do it more cost effectively, can someone do it with more capability, which is when we come in. We are seeing customers and deals, I'll mention the Indian market again. So Indian market has actually been embracing the subscription-based model a little bit more than we have in the states. And so in that market, that's how we get customers. So we go into that market. We become a deployer as opposed to selling components. We're picking up market share. We're doing that in Australia, New Zealand, same thing. And again, we'll be announcing something in Europe, fairly large-scale. But -- so those are expanding who we have as a customer of the brand but also the spend.

Yes. And all of the examples you mentioned, I think, are outside the U.S. Is that more of a non-U.S. push? Or what are you seeing in the U.S.?

I think we saw it tick up in different regions ahead of the U.S. The U.S., the community banks are very actively involved, as you can manage. For them to try to keep the resources internal, for them to have a leverage to manage a CIT vendor, for them to be able to support an ATM footprint or drive it or route the transactions, they really don't have the infrastructure. So they have been very active the -- we just had our Digital Banking Conference a week ago. And everybody we talked to, that's the #1 product we're cross-selling for community banks. Working its way into regional banks, the conversations with regional banks has been very productive. And then I think we'll see some of the larger U.S. banks starting with off-prem. So the ATMs they have that are outside of their branch structure, they'll start to outsource those as well.

Yes. So I guess shifting to retail. Could you discuss some of the trends you're seeing in self-checkout? I don't know if the pandemic accelerated any demand trends well there.

Well, so in the pandemic, it started to -- the trend was, I don't want to have somebody touch my stuff, right? I go to a store. If self-pick, I want to self-checkout. So that kind of started. It's not really what's driving the trend now. What's driving the trend now is cost of labor. So coming out of the pandemic, I'd say cost of labor and just the scarcity of labor to do assisted lanes. So we've seen that from a productivity and efficiency standpoint, the level of interest. It's -- it kind of manifests itself. So we've had traditional clients who have had lanes and maybe they've had 60% of their stores self-checkout, the rest are the system lanes, and they start to add more self-checkout. So they might go to 80%. Some might have all their lanes self-checkout-focused. But then we've seen it go down market, grocery store chains that in the past, didn't think it would be efficient for them to do it, they simply can't afford the labor, can't get the labor, so they're starting to roll it out. We've seen convenience stores, convenience gas stations, convenience stores start to roll it out literally around the country. So that's been a big driver of self-checkout. And again, I think we've seen consumer behavior change for people. So it's an interesting -- so we do all that -- what we do with self-checkout at Walmart. We would argue that the self-checkout, the hardware itself is an important component, but that's not really what differentiate to its user experience on the software. So as we've rolled our tech out to convenience stores, we had a big chain of actually East Coast-based gas station convenience store. So they literally just roll them out to see what would happen. And what they discovered is people would walk in and knew how to use NCR self-checkout equipment. We said, of course, because they're all self-trained at Walmart. And so once we have about 70% of the market, so once you learn how to use that user interface, when somebody new pops it up, they don't have to spend the time to retrain their user base. So we've seen that take off. We've seen people start to roll it out and use it, big footprint, which takes coin and currency as well as software, which is just digital.

And where are you in your shift to -- shifting clients to the MREL platform in terms of like how much penetration in terms of clients.

So we share our platform story. So we call it platform lane. So we track the lanes because each retailer has a different kind of footprint. We charge by the lane. We focus on getting people on the platform journey. And so we have 1.5 million lanes using our software around the globe. We'd like to convert all of those to the platform, but we have specific goals in getting one on the platform. Once we get on the platform, we can start to upsell and cross-sell. So it might be POS. We'll cross-sell into self-checkout, again, the software-oriented self-checkout. We'll cross-sell loyalty rewards, we'll cross-sell -- we have a cart called Freshop, which allows you to like Instacart experience. So it's a captive for that grocery store chain to a digital front end. We'll connect to the payments. So we'll do -- we'll connect and add the ARPU on that journey. Our focus right now is getting people started on that journey. So each quarter, we share our platforms. I'd say product-wise, we're well down the path. Underlying platforms, infrastructure, the product, and now it's just getting customers moved over. We have a strategy and a game plan, which allows you to incrementally shift. We'll go in and help you virtualize your lanes. We'll have you -- put you on the platform to integrate and then start to move over in components. So you avoid the big bang inside. So that conversion migration path is still -- if you look at the metrics on $1.5 million is the denominator, but the starting point is pretty small. We think by the end of the year, we'll have a pretty good buyout of that and then, going forward, and into '23, continue to do good progress.

Got it. And then on Hospitality, just finishing up some questions. What are the trends on enterprise versus SMB, like how they kind of compare given the macros kind of deteriorating a little bit? And also beyond that, your Aloha platform, progress with that, launch of that?

Yes. So the enterprise side of Hospitality, so the enterprise restaurants start to have a little bit different dynamic than the small ones, mom-and-pops, product complexity, product capability, the ability to do reporting and then for someone like us, the ability to actually integrate and install and support. So I'll give you an example, like a Wendy's, we service and support Wendy's around the globe. They use our software tech, they use our hardware tech. When they open a new Wendy's, we literally take all of the hybrid components, maybe 60% are ours, they'll have some other components of the server. They've -- they use a different kiosk. We will bring it all together, we'll load all the software on the hardware, throw another pallet, we'll shrink wrap it and we'll ship it to Wendy's, whether Wendy's is in Omaha or Wendy's is in New York, Wendy's is in London. And then we'll have people unwrap it and install it. And then when it's up and running, if they have an issue with the franchisee, they'll pick up the phone and they'll call 1-800 Wendy's, it's really NCR answering that. And we'll do remote diagnostics to be able to fix -- that's a very different market than a mom-and-pop restaurant. And so those large enterprise accounts, again, underlying technology for those accounts is the NCP, the NCR Commerce Platform, all the micro services around things like tax at order entry or inventory management are the same across retail, Hospitality, the ability to open up APIs and integrate in other third-party products. So in that segment of the market, we have a really, really strong foothold. We think we're the market leader. Our ability to support franchisees as their -- but it's just refreshing whether it's growing is very strong. That's about 3/4 of our business. In the SMB market, it's a little different. It's product. We rolled out a product called Aloha cloud. Really focused on the segment, everything bundled together, the handheld device, the terminal device, all the kitchen controllers. We do really well if your kitchen is a little more complicated. So a table service restaurant that's got a little bit more -- function, you're going to end up with Aloha versus somebody else. We provide a service wrap, we integrate all the payments. So that business is a product suite. Our product suite right now is doing really well. We again, rolled that out this spring. And then it's feet on the Street. So that distribution channel used to be mostly third party. Today, it's mostly direct. We've acquired a lot of our third parties and then we've stood up in different regions. We'll hire a manager, we'll hire people. We'll bring them into Atlanta, train them and put them loose to go knock on the door. So that business is starting to take -- so our Hospitality numbers is actually very strong.

Got it. Got it. And I guess one more macro question. On the hardware part of POS and ATM, what impact has elevated inflation and supply chain constraints -- what impact has that had on -- in terms of the cost side and also just slowing potentially getting devices to clients?

Yes. So we actually -- and you saw this in our numbers in the first quarter, we actually decided that we're going to serve our clients. So we've been able to get boxes to our clients, owning the -- all year long, find the supplies, find the components, get the transportation even if we have to expedite. We chose that. Again, our model is a suite of products, hardware, software and services. So when it came to the hardware, we went and got it and we serviced our clients. It cost us some profitability, particularly in the first quarter. Second and third quarter, we started on opening up new channels, new -- redesigned some of our boxes, redesigned some of the chips that we could use on the components, and we were able to address some of the cost. We think that that's actually going to be mitigating going into '23. We were just talking on the West Coast, the ports are no longer clogged with hundreds of ships. So we can now put more components on ships and counting them to arrive at the ports, timely as opposed to previously using airplanes. We've been able to address our supply chain, things like component chips, things like screens, cables, and be able to get back to cost. So we think that's actually coming back in line. We've worked with our customer on the hardware side where we push price. So if you need it in a certain time frame or you need this piece, they're opening up a store. So they're opening up a restaurant or opening up a store, they need to get store opened. We'll get there and deliver it to them. But as we've gone through the year, we've been able to push the price appropriately. So we haven't had major delays. We haven't been -- we haven't shut customer migrations off. We supported them and we've worked through the costs on the back end.

And just there was -- one of the things I was going to ask is, obviously, you had the headwinds due to macro and supply chain. You had price increases. As you kind of look forward, price increases and cost takeout, is there a forward benefit just to clarify? Or was that all taken each quarter?

Well, so we identified roughly $200 million of price that we're trying to roll into 2022. This is the end of the first quarter and $200 million of costs that we thought we need to try to address some of those costs. Some of the costs we think are temporary like supply chain cost, but some costs like interest costs are going to be there. Some of their labor costs are probably going to be more. So we said we needed to take some costs out. We think we did a pretty job on price on the price through. We have some CPIs we can roll through. We did some surcharging. We did on the hardware, the ability to reprice. So first quarter, those are orders that we're taking in end of third quarter, early fourth quarter, when our all supply costs jumped up, we couldn't address. In the first quarter, we're taking orders, we get increase of price. So we think we got about $200 million of price in '22 going into '23. We'll continue to look at our CPI factors and be able to, we think, improve that again. On the cost side, we did some cost takeout throughout the year. Just like everybody else as we look at '23, we're going to tighten our belt again. We've identified we're going to take out some additional costs. But we think that will put us on the trajectory in '23. We think it's going to be a little bit of a challenging environment globally on the top line, but we think we're positioned quite well. Our business is all about efficiency. We're driving self-service and banking. We're driving self-service in retail. We're driving self-service in Hospitality. We have leverage models, we have scale model. So we think about where we're positioned in an economy where people are going to tighten their belts, we think we're going to do quite well. And again, we're going to look at how we can tighten our belt to make sure we can get our margins where they need to be.

And then the strategic review process split into 2 companies. What's the update on that?

So we announced, I'm going to say, 2 months ago now, that we had gone through a strategic review. We looked at -- and quite frankly, when we looked at our company, we looked at our digital Commerce side, whether it's Hospitality, retail or Digital Banking. And we looked at our peer group, and we looked at what we've done in terms of size and scale, and we believe we have products that are bigger. We believe we have products that have top line growth, and we believe our products are more profitable. But the market really wasn't rewarding us the way we think it should. So we looked at alternatives. What became very clear is separating on our business, so people can pick and choose, do you want a very stable -- we think the ATM business is going to be an awesome business. We're going to separate that out. We are committed to making a transformation to make it subscription-based. It's still -- it's about 63% recurring today. We think that number can push up to 80% based on what we're seeing in terms of the uptick. We think it will be a solid study. We think it will get growth because we're addressing a bigger spend in a market that inherently doesn't have a lot of growth itself, but we're going to get more of the spend in that market by shifting to ATM as a Service. And we have a kind of a special secret weapon in the Allpoint network and some of the things that we can do to drive transactions in order to help customers extend their reach. So that business is going to be, we think, very solid. It's going to generate good earnings and good cash flow. We think that's a different buyer. We'll probably put a dividend on that to get a real stable return. That will free up NCR -- the remainco, which is a software-centric business, it's software-centric end platforms are on Commerce, retail, Hospitality, and it's software-centric on platforms around Digital Banking. And we think that will allow investors to see how we're positioned for success in that business. We think it's going to be higher growth. We think those businesses will grow closer to 10% or higher. And we think we have some opportunities to pick up market share. So we've announced that. Internally, we're going down the path to do that separation. We have several -- back half of next year, we've got some internal things we have to do. And quite frankly, we're probably going to look for a market, particularly the debt side where the market is more amenable to standing up a new spin-off company.

Okay. And is the Board open to other alternatives?

So as we've gone through this process with the Board, the goal was simply -- we believe we have really good products, we believe we have a really good market reputation. And having a lot of market success, we don't think we're being rewarded on the stock price. So we're going down this path. We've talked to the Board about going down this path and maybe some of the things that become opportunities, and they have been very open-minded to if something were to come up, that would get us to an event that would create value faster or more value than the path that we are on. They're certainly open to other ideas.

So this is supposed to be interactive. So if there's any questions in the crowd, raise your hand. I can keep going. All right. So is there any dissynergies associated with the separation?

Yes. So we had a little bit, we think, in certain areas. Obviously, in some of the corporate functions, you've to spend against the finance team. Now underneath our -- Tim, our CFO, underneath his team, he has a vertical stack. So he's got an FP&A team, a controller for retail. He's got one for hospitality, he's got one for banking. So he's got underneath to cover it. But there'll be some -- you have a new CFO, you have a new controller and things like that. You have the same thing in the legal side, same thing in HR. So there's a little bit of replication -- you have the public company Board. We have a little bit of a pulling apart we have to do on some of the service components. So we have said $80 million to $100 million of potential dissynergy. We're hoping to get it less than that. The flip side of that is we do think we'll get some more attention and focus. We've seen some synergies in what we do on the retail side versus what we do in Hospitality as those markets have kind of started to blend together. So we think as part of the next 12 months, while we might have to spend in one area, we're going to take some costs out. So net-net, we're going to end up with some cost benefit going through the next 12 months. So we'll address all the dissynergies with some other synergistic savings.

Got it. And how will the capital structure of each company probably look? Will there be more debt leverage on one versus other?

Yes. Right now, we're looking at -- so again, fast forward about a year, again, between today and next year, we think $500 million to $800 million of cash flow. We would plan to use the first $500 million of cash flow to delever our balance sheet from where it stands today. We think the ATM as a Service business, the ATM side can take more debt leverage. So we think debt is going to be high 3s, maybe 3.5% to 3.75%. And the Commerce side, the software side, a little bit lower leverage, so 3% to 3.25%. So we're going to have a little bit less leverage. We do think in some of those businesses, there may be opportunities to do some aggregation or some rollout simply because as the market shifts, we make money in all our businesses, cash flow on our businesses. We think there's a lot of competitors who don't do either one of those today. So we think there'll be some opportunity to do some roll-ups, particularly on the digital side of the business, Commerce and Digital Banking.

Got it. And how do you think of capital allocation as you go through this process? Like will you continue to share buybacks? Is M&A an option? Or would that be too big of a distraction as you're doing the separation?

Yes. Again, I think -- so first, on the priority list is we do think we need to delever about $500 million. Again, as we look at it today, between now and that point, we took about $500-plus of cash flow. So to the extent that, as Tim looks at it, he gets cash flow coming in faster time-wise than we think. Looking at some small tuck-in deals might be a possibility. And then when we look at our stock price today, we think it's probably at a pretty good value. So there is an opportunity to take and buy some of those shares back. But I think the focus will be making sure we have the right leverage balance.

And just in terms of how this whole process affects your cost takeouts that you talked about, could you maybe elaborate on how you're thinking of -- and it's one of the -- thinking of the current company and the cost takeout and running the company as opposed to the future state, right?

Yes. I would say some of that comes one and the same, right? So we started an initiative to start to stand up a spinco or the ATM business. And as you start looking at that, so Owen and the team internally are looking at saying, look, if you look at what the characteristics of that entity will be versus the characteristics of the software-driven remainco, the number of countries that we're in, the product offerings that we have, both of those businesses, the software side is going to continue to shift to more software-centric and less and less component of hardware. Most of our businesses have already moved to a manufacturing light model. We've only got 1 plant left in the globe. We had, I'm going to say, 7 plants about 5 years ago. So we design and engineer but we let somebody else do that componentry. So as it looks like internally, what do you have to do? What do you have to do to run ERP? What do you have to do for your financial systems? What do you do for your teams around things like countries, product complexity? You can start to see why you're going through the separation. You should clean up some of these things behind -- and that's what the team is doing, and they're finding areas to drive savings. While other areas might have some cost component, the savings we think will be greater than the cost.

Great. And I've got a hand signal. So we've got maybe 30 to 60 seconds. Any closing remarks for the audience?

Yes. So I think one of the things that we saw coming out of our strategic review is just making our company a little more simpler to understand. So what I'd suggest, if you look at our company, it's really 2 things. It's a POS-driven company. We have more -- when you say POS -- NCR and POS software, it's the software stack that we have on the POS. It's the heart and soul that runs your establishment, whether it's a retailer or whether it's a restaurant. And it's so sticky to what they do, our simple goal is hold on to those. It's 105 million lanes in retail, it's in the 500,000 in Hospitality, 2 million lanes, hold on to them, get them migrated to our platform, which we think our platform of collection software services is ahead of others in the marketplace, and then start to cross-sell and up-sell, add a payment. It's kind of a simple migration strategy. It moves us to very software-centric, and it moves us to a high recurring revenue stream. So that's on the software tech side. On the ATM side, we see that market continuing to mature into a subscription-based market. It's a scale play. It's an effectiveness play. Again, you're going to see some more announcements coming up, some names that you're going to be surprised that they're starting to outsource their ATM stack. It turns a business which is thought of as flat into a growth business because we're accessing what, 2/3 of the spend that we don't have access to today. Globally, we ship more boxes than anybody. We have the highest number of ATMs that we drive, 280,000 devices, more than anybody else in the world. We support and service from more ATMs than anybody else. And so we think that business is going to mature and we're going to end up being the leader in that space. So we have 2 very strong organizations coming out of this. I think when you start to look at where they're positioned, you'll -- I think most people get surprised at what NCR really is today.

Awesome. Okay. Thank you. Thank you for the insights. Appreciate it.

Thanks.