NCR Voyix Corporation (VYX) Earnings Call Transcript & Summary

Good morning. Thank you, everybody, for joining. My name is Ian Zaffino. I'm the equity research analyst that covers NCR. I have an outperformed rating on the stock and very thankful to have the company present here today. We're going to do a fireside chat. I would ask that I have a bunch of prepared questions, but if anyone wants to have a question answered, please put it in the chat or you could send me an e-mail directly at [email protected]. Either ones fine, and we'll make sure to get your questions answered. So with me today is Mike Hayford, the company's CEO; Michael Nelson, the company's Treasurer and Investor Relations. So guys, thank you very much for joining.

Thank you, Ian.

Okay. So now you guys have certainly a lot going on here. It came off to the back of super strong earnings, really blew out numbers, and you're preparing for a spin or separation of the company. So maybe if you could just start off with kind of a broad description of what's getting you excited here, what the company is doing, how the company has changed since you've taken the reins several years ago, and maybe kind of give us a broader overview of kind of what's interesting?

Yes. I'll put the spin to the side. I'm sure we'll talk about the spin. But just in terms of execution of the business, the transformation of the business. You saw in our second quarter numbers. As far as we can tell, we hit an all-time high on earnings and EBITDA in the 138-year history of NCR, we can now go back to 1998, I think the kind of data, but really, really strong performance and really strong performance, quite frankly, during a time that we asked our teams to focus because of all the potential distractions of getting ready for a spin and they delivered. In a broader context, we started a journey about 5 years ago. We started with shifting towards a customer focus and market-based focus. We said we're going to align around our customer needs and focus on taking care of customers with the explicit purpose of having customers who are not only willing to come back and buy more from us, but also willing to recommend us. We moved our customer set, our NPS score from 14 to I think it was 62 in this last go round, which is quite remarkable. We focus on that. We incent people to do that, and it shows up then in our numbers in terms of our repeat business. Second thing we did is we said we're going to shift our business away from being hygro-centric. We're going to shift it to being software-centric and subject platform-specific. So build out our software differentiate our offerings in banking, in hospitality and in the retail business. We set some goals to shift towards 80% software and services. We're right around that number on this quarter. And it's not that hardware is not important to us anymore. It's just not the focus in terms of how we differentiate. We think the hardware is an important component, but clearly differentiating software and service makes us a stickier provider and a more strategic provider to our customers. So that transformation has been going on. We talked about just the discipline around driving earnings. We've obviously done that. I think we're rounding up right around to 20%, which was our goal. I do think there's some room for the respective companies to drive even higher margins going forward as they continue to get more leverageable products on the software side, on the service side, on the outsourcing side, on products like ATM as a service. And then lastly, we talk about improving our products. So we put a lot of investment in our products to make them market competitive, bring their technology stacks current. We've done that in retail. We've done hospitality, and we've certainly done that in digital banking. That shows up again in terms of our wins. We talk about our wins each quarter. So across the board, the customer side, the focus on [indiscernible] software, the focus on subscription recurring and the focus on product has really started to pay off. But what it really does, Ian, is it really puts us in a position as we separate the 2 companies that both of them are in extremely strong position.

Okay. That's really a great overview. So if we're going just dive into some specifics here. Let me just talk about the second quarter a little bit. Maybe give us an idea of what's driving a lot of that strength, what you're seeing maybe go through retail, hospitality, banking? And kind of what are the key levers of growth for each of those segments?

Yes, let me start with the banking and self-service banking, traditional ATM business. We're continuing to see -- and I think Tim talked about this [indiscernible] talked about this on the first quarter call that we expected a relatively flat year. We now are expecting about 4 points of growth a little stronger than we anticipated. And the flatness is really driven by the fact that we continue to win our ATM as a Service contracts, those defer revenue. So while we're deferring revenue and growing ATM as a service a little faster than anticipated, we're also driving a traditional business at a very, very high rate -- our products are extremely competitive, our service is by far the best out there in the industry when it comes to supporting and servicing ATMs. Obviously, we've got a little bit of tailwind from some of the challenges our competitors are facing right now. And then we have a very unique offering when it comes to ATM as a Service in terms of bundling it with our Allpoint network and really delivering something to -- you think about [indiscernible] regional bank, allowing them to expand their footprint, deliver better service and quite frankly, it drives revenue lift for us. When we shift somebody to ATM service, it improves our overall total contract value to 2 to 2 5 [indiscernible] what it would be under a traditional model. So we're pretty excited about the self-service banking business, coupled with Allpoint. Digital Banking saw really strong digital banking results this quarter. We continue to add more accounts. And you got to remember, there's about a 6-month lag between signing a customer and getting them up and running where we start to get revenue. So these are customers that we sold last year. on board, driving more account volume, driving more revenue. We talked about wins in the second quarter, continuing to have a lot of wins, doing a really good job on our renewals, which was obviously important to hold on to your existing customers. So digital banking, we talked about second half of the year probably delivering 10% growth each of the quarters and then heading into a strong 2024. And strong 2024, just because that is a very pure play SaaS business for us, so we can actually project forward the account growth, customer growth and have a pretty good look at what that business is going to deliver into the future. On the retail hospitality side of the commerce side, hospitality continuing to have strong growth. SMB a little more competitive. It's a small part of our business. But at competitive, we have had a lot of success particularly with ARPU, our average revenue per account by adding payments. So when we sign up a new small business restaurant, we add payments. It drives our revenue per account up dramatically. And then the enterprise side, enterprise [indiscernible] large restaurants, restaurant chains of whether it's 50 table service restaurants or whether it's a big restaurant chain like the Wendy's. When they grow and they add another restaurant, we grow. So a lot of that enterprise growth is literally our customers growing, adding more sites, adding more product, whether it's hardware, whether it's software installs, whether it's a service component. So that's driving a lot of the hospitality strength. It's just having embedded market leadership, I guess, is probably the key thing there, particularly on the enterprise side of hospitality. And retail is somewhat similar. We're much, much stronger in the enterprise side. So as our customers continue to grow, I'd say in retail, we believe there's a pretty strong imperative for retailers to upgrade. The point of sale is really kind of we call the heart and soul of a store. And they have been inundated over the last 3 years, a lot of pandemic driven with different channels that they've got to open up, whether it's self-pick or whether it's delivery or whether it's having a third party come in and pick -- and so they've got to do that integration of channels, a lot of the technology that they're sitting on makes it difficult. So our new product out there, the Emerald product and the NCR commerce platform as we look at it, is starting to resonate, and we believe we're winning a lot of those new again, upgrade imperatives in the retail space.

Okay. Great. That's very helpful. And if we could maybe stick on retail for a second or say stay with it for a second. So try to continue to do really well. What are your expectations there for growth? And how as investors do we think about maybe the ultimate penetration of this product, maybe compare U.S. to what you're seeing in other markets and what it ultimately can get to.

Yes. I would say in industrialized markets, the U.S., U.K., Europe, Japan, where labor is still at a maybe a premium in terms of -- it's more expensive, but also challenges getting labor. Customers continue to roll out more and more self-checkout. What we've seen happening, you've seen this in our numbers -- our unit numbers continue to be very strong. Some of the revenue per unit is going down, and we don't actually view that as a negative. What's happening is convenience fuel stores, CFRs are starting to put it in. So when you go into a gas station or convenience store, you're starting to see self-checkout. It's a small footprint. It's generally a card only. But you're seeing them deploy typically 2, 3, 4 devices. They leverage a single person into maybe for self-checkout. That's driving a lot of growth. And what you see is our margins going up in that business. So while the revenue may not be taken up as fast as it has in the past, our unit count is going up, margins are going up because the software stack and service stack is the same even on the smaller footprint devices. We've seen smaller grocery store chains that in the past were concerned about maybe the service or maybe about not having an assisted [indiscernible] quite frankly, having to go to self check-outs because they can't get the staff. Once they do it and they find -- we always say that if you put an NCR self check-out, the hardware is the hardware. The user interface and the ease of use of ours is dramatically, we think, better than the others. And the marketplace itself is self-trained. They go to Walmart, they go to Whole Foods, they go -- they see -- we have 2x more market share than anybody else. So that user interface and the ease of use of self-checkout when they -- when somebody puts it into a convenience store, the customers walk in, and they know how to use NCRs self check-out. So we think that's going to continue to grow. We don't see the labor markets abating for that end of the market. It's shifting again to, in some cases, a smaller footprint, more software-centric. We've connected it into our platform. So it comes as a -- you can bundle it up with your point of sale. You can know that integration -- And then in some of the innovation, we're rolling out something called Halo. So we're integrating the vision side. It's a convenience store, you don't have to scan everything. What we've done differently is you can put your items on the tabletop, it will vision scan them. It will send you a receipt on your phone, if that's what you desire. What we've seen on competitors, if they can't scan the item and it's hard to keep up on held vision scanning, you can pick up the item that it doesn't read and you can actually scan it with UBC code. So our product, we think, is going to be quite well received in that marketplace, speed, convenience, ease of checkout. So we see the industry continuing to grow, move forward, and we think we're positioned extremely well, market share leadership and the innovation on new product.

Yes. And maybe also if we then turn to digital banking here. You had some nice wins recently. Maybe discuss that a little bit and what were some of the drivers of those wins? And then should we expect this level going forward?

Yes. So if you follow us, digital banking has been a little bit of a journey from 5 years ago. We stabilized the product. We invested in the product. We took it to a new technology platform. So it runs on Google Cloud now. We did that about 1.5 years ago. Our availability, our delivery, our consistency is through the roof high. It's really, really good. Getting on the Google platform allows our customers. We then roll out products for all the analytics. So they have the best analytic tools now in the industry. Future function stack, capabilities to do the functions that banks need to do, whether it's opening and originating accounts online, whether it's payments, whether it's transactions. We think our product is as good as anybody else out there. One of the things that we're seeing, particularly on the Digital insight side, which is about 600 customers is we have a leveraged model. So every time we roll an enhancement, everybody gets it instantly. And a lot of our competitors have difficulty keeping up and doing the upgrades. That's been a huge boom for us, let's say, when we go and compete for new customers. We've been able to take some customers away from some of those other providers because the upgrade cost that they were seeing or the ability to stay current on their -- the Digital Banking platform was impaired. So we're winning in that regard. In the high end of the market, we had 2 large customers over last year. We signed another very large $25 billion of Wintrust associated banks and the SEC, which is the second largest credit union. So we think literally to a small credit union, a small community bank, all the way up to a large community bank or a large regional bank, all the way up to some very large entities. We have a very competitive product. Our service, we think, is as good as anybody else out there. So holding on to your customers and then being able to win to the market. And that's what you saw in the second quarter, you saw in the first quarter, we think that will continue in the foreseeable future. And again, we talked -- I think talked about it at our last Investor Day, 1.5 years ago that we thought that business could grow between 10% and 15%, and you're seeing it exiting 2023 at that level, and we think they'll continue to move...

Okay. That's very helpful. And I know earlier, you talked about ATM as a Service. Maybe kind of give us a deeper explanation of the benefits of that what the opportunities are to maybe broaden it throughout your customer base? And what's the value proposition of it?

Yes. Let me just start from the perspective of NCR, why this is such a game changer for us. And if you think about traditional NCR self-service, we're viewed as an ATM company. We deliver an ATM, a very sophisticated box that does some very unique things. We think we have the best ATMs out there. We wrap that with a service module, meaning we'll send people that we're rolling track. We do that all over the world. We have a very leveraged centralized model to deploy and to deploy the tracks around the globe. And then we have -- we think the best stack of software out there. We've been upgrading our software, the software that runs on an ATM, activated enterprise, but also the software that used to manage ATMs and the transactions, manage the cash, et cetera, et cetera. That's our traditional business. When you look at what a customer spends on running an ATM, supporting an ATM, which involves eyes on glass, watching the tools that we have for a fault and then sending a ticket. They sent a ticket to us today, managing the software stack in ATM, supporting the installs of ATM, doing the upgrade to ATM, managing the cash and transit vendors. That is another 2.5x if we get the whole bundle as opposed to just doing the traditional side. So for us, it dramatically increases the addressable market -- any market that we think is GDP grower, 2%, 3% grower in the markets that we play. Now we've expanded that. We think it can grow dramatically higher than that. So for us, it's a dramatic shift in how we go to market, accelerate our growth. The other important thing to think is the things that we're adding, sending trucks on the road is not leverageable. You guys send a person to track and get to an ATM and you can optimize the routes -- But when you start looking at all the functions you do with ATM services, they're highly leverageable. So the margin in that business will start to go up as we shift more to as a service. It turns it into a subscription predictability of the revenue stream. Right now, we're probably 60% to 63% recurring on the bank side when [indiscernible] spins out. They have line of sight to get to 80% over the next 4, 5 years. that's dramatically different business than what we had 4 years ago, which was maybe 40%, 45% subscription. So you have a subscription business, predictable revenue streams. You have a higher margin rate because those added functions and ATM service are more leverageable. So the margin should start to tick up. And we think that business will generate pretty decent cash flow. So it's going to be a very different business. It's already a different business today. When we go to market, we go to a community bank and we talk about what they're trying to do to support maybe 100 ATMs. The challenge they have quite frankly is similar to obviously like in retail staffing. They struggle to get the technology resources to support an ATM. They struggle to get resources to manage an ATM. We can clearly go in there and do that at a better cost point for them. But also we pick up so much more additional revenue. We can drive additional revenue and additional margin as part of that. Our -- if there's a secret sauce, I'd say it's Allpoint network. So we go to a -- we have a customer down in Florida as an example that we converted to ATM as a Service 1.5 years ago. That's a pre-hurricane. And -- so we took the 150 ATMs. We started managing them. We managed them throughout soup to nuts. When we -- when they hit with the hurricane, we kept them up today, kept those ATMs, well, the first thing happens in a disaster, those all pass out, right? So we can't [indiscernible] players kind of keep the cash rolling. They're part of the Allpoint network. We sent the notice to all their customers. Here's another 500 ATMs in your marketplace that are part of Allpoint because we have 55,000 devices across the country as part of Allpoint, total game changers. So [indiscernible] been very helpful in terms of reference point. What you can do not only to reduce your cost, deliver better service to your customers as a bank, delivering ATMs, but expand -- really expand your network and availability of the network customer. So it's a pretty compelling argument for credit unions, the community banks, but also some of the regional banks just looking at off-prem and delivering a better product at a lower cost point.

Okay. Good. So if we were to stick on ATMs a little bit longer, just as far as ATM hardware and ATM business, I guess, in general, what sort of the growth that we should be projecting in this business? And what does it grow? And then are there any like market share gain opportunities now that one of your competitors is financially not doing so well?

Yes. I think the beauty of that particular market is we serve banks. And I think banks, highly regulated banks probably have the strongest infrastructure on risk management by requirements, they have to. It's part of the regulatory environment. And so when they see one of their providers go through struggles like Diebold has done. It drives a pretty heavy stream of traffic to our teams -- to our sales team. So that's been fairly active. And we do believe we'll pick up some market share regarding that. So on a traditional basis, I think we'll pick up market share. We'll pick up some customers. I think as importantly, as we see some of the market shifting to ATM as a Service, quite frankly, that's an offering that they can't deliver. They don't have the capabilities and know-how, but they also don't have a balance sheet that will allow them to deliver ATM as a service. So we think that market is a market that we have different competitors in and we'll continue to pick up market share vis-a-vis that. The third thing I'd say even is -- in some regards, one of the outcomes of their financial struggles prior to going into bankruptcy, they continue to price, I'd say, somewhat erratically because they were very focused on cash flow to make their debt service. I think once they've entered bankruptcy, we see them pricing more rational. So our pricing has actually improved in 2023. We see that being the new norm, I guess, which quite frankly helps all of us in the industry. So I think all that helps. In terms of overall growth, so right now, when we talk about shift to recurring or shift to ATM as a Service. We're effectively deferring revenues to the future. As the cost taking them out of current periods, and we've called it out -- [indiscernible] called it out on this call, but what that does mean at some future date, that headwind, which is depressing our growth right now, it's going to shift to tailwind. When that shifts, I think the -- so if you think about it, it's just in a neutral sense, if you're growing 4% or 5%, now you're depressing that a little bit when it shifts, it's going to accelerate your growth fairly rapidly. Just by that shift, but the more important part is you're talking about contracts that are 2 to 2.5x greater than just the traditional business. So I think what people are going to see, and I'd be a little surprised probably through '24 into '25, you'll start to see that shift in the back end of '25, headwinds shifting to tailwinds, and then you'll start to see that growth accelerate. I think they have a fair amount of room to turn a market that might be, as we said, a GDP grower into a mid- to high single-digit grower over time with a better margin -- simply better margin because of the stack of what you're delivering is much more leverageable. We have a very good leverage model and their margins will start to tick up.

Okay. Good. I guess just turning to the spin, can you maybe help us understand the rationale for the spin? What is it going to achieve, how did you decide, how to separate each business, what goes in SpinCo, what stayed in the RemainCo? And then maybe just some other kind of color you could give us on that?

Yes. I'd say we spent quite a bit of time looking at different alternatives and different paths. And let me just start with the focus on this whole initiative over the last almost 2 years now has been? How do we unlock shareholder value? How do we get rewarded for what we think is a very strong 5 lines of business that are #1 in each of their segments. Have great product, have good customer set, have the opportunity to grow as we continue to move them forward. And the market really hasn't recognized that. So as we go to market and we talk to customers even as we talk about the spin, they just love what we're doing. They love the products we're delivering. They love the service, and we're seeing that reflected in the customer sat scores. Our employees look at NCR and have a great deal of pride in NCR, in the brand and what we've built. So it really wasn't related to customers or employees. It really was in the marketplace. I think if you look at out self-service banking, you look at what we're doing at the network in the banking side or ATM as a Service, you look at retail, you look at hospitality and then you look at Digital Banking. They're different products, they have different competitors. Some of them in different markets. We're all over the globe. In some cases, we deliver hardware stacks, which obviously hit us last year during some of the challenges in 2022. And we concluded that it's difficult for the marketplace investors to really look at it and say, "I want to invest in x." And then under NCR, you get some things you may not be interested in. At the end of the day, we said the most critical thing to pull out is really the ATM business. The ATM business is a unique business. We think it's extremely strong. We think the future for that is really bright. But not everybody wants to buy into a software platform business like retail, hospitality and Digital Banking, wants to come along with an ATM focused business. And quite frankly, we have a lot of interest in the ATM business because of the stability, the leadership in that market, the global footprint that people like that, but they don't like the separate platform side, which is a higher growth and a little bit more higher investment. So we -- the decision was just to pull out the ATM business. So if you look at NCR, we pulled out the ATM business, our ATM self-service banking segment today and then the payment business, but the -- it's the Allpoint payment business, the merchant side, we kept with the commerce business. So that was the decision of how we pulled it out. We've been on the road since last September, just doing nondeal road shows, talking to investors. And I got to tell you, I think it's working because when we sit down and walk through those 2 companies and what they do, their profile going forward, what we're planning to do with the businesses? The level of interest -- I'd say the level of understanding is much greater, as you can parse upon 2 businesses, one ATM focused, 1 software platform focused. And you can make decisions on where you want to invest, whether you invest in both, the best one or the other. I think we feel pretty good about that the decision to spin was the right decision. We think it's starting to play out. And our interaction with investors has been very positive around that step.

Okay. Good. And maybe you talked about the ATM spin. Maybe help us understand how you arrived at that leverage target? What are you now thinking as far as free cash flow? And especially since free cash flow has been super strong at the company level so far, how we think about the free cash flow on that ATM spin business?

Yes. So I mean we're driving very high free cash flow this year. Again, part of that is last year, we didn't do as well on free cash flow. A lot of that was due to some of the impacts hitting us, and we ended up with a little bit elevated inventory levels. So you saw some of that when we add earnings calls last year, third quarter, fourth quarter, Tim talked about the fact that some of that's going to come off. Working capital in 2023. You saw that in the first quarter, you saw some of that in the second quarter. So very, very strong cash flow year-to-date. Some of that coming off the balance sheet. But on an operating basis, continuing to show that we have a business, it's a scale business. It drives profit and it drives free cash flow to the bottom line. On the 2 businesses going forward, NCR Atleos, which is the ATM business, we think over time, it will be a little bit higher cash flow. And again, as that starts to tick up high subscription, very predictable revenue stream, higher margin and higher free cash flow. We anticipate on that side of the business that -- so it's going to be out about 3.5-ish, 3, 3.5, 3.6x leverage, a little higher leverage than we're going to have on RemainCo or [indiscernible], simply because it's just a much more predictable business. It's a steady business, doesn't have much volatility at all in the revenue streams, and it has very predictable free cash flow. We still look at potentially delevering somewhat in that business, so down from the 3.5% towards 3 -- but we also expect that has enough cash flow that they will declare dividend and pay a dividend on that business. And then they'll have investments to continue to invest in that business and grow. So that side of the house, very stable, steady, a little bit higher leverage, cash flow, probably a little bit higher on a conversion of EBITDA, free cash flow than we do as a company today on that side than on the RemainCo side of the business.

Okay. Good. And then also -- just maybe talk about the inflationary environment now. I guess, especially on the hardware side, we're seeing a moderation in a lot of the cost of the freight component costs, et cetera. How are we thinking about inflation going forward? And what does that maybe mean to the margins and the tailwinds you'd enjoy on the margin side?

Yes. In our thesis last year was that some of the cost spikes, particularly in supplies, component cost, deliver ATMs, to deliver [indiscernible] or even point-of-sale devices wasn't really embedded inflationary. It was opportunistic pricing that some of the suppliers took. And it hit us hard, obviously, first quarter of last year, but hit us throughout last year. We've seen those mitigate dramatically in 2023, existing supplies coming down to more normalized levels of supply cost. But also because we engineer our components, we've been able to engineer around. So if we had a chipset that we had spec-ed up for an ATM, we engineered and qualified other chips. And so now we got in the market, we got a little more competition. That's helped us dramatically as we look at our raw material costs in 2023. The other piece that has helped us a lot is just pure transportation. In 2023, I think everybody understands, it's been in the paper that the transportation -- global transportation was broken last year. Container costs were extremely high, but worse than that is you couldn't rely on putting an ATM or [indiscernible] on a container, on a ship, and getting it to your customers in a timely fashion. So we had expedited freight cost that were 4x the normal year in 2022. That's come down dramatically in 2023. We put things on containers, containers are cheaper. They get to our customers in a timely fashion. So all of those costs that hit us in '23 are starting to unwind. I think we got a little bit more room for the continued unwind. I don't see embedded inflation costs, continue to push those costs in the way that we saw in 2022. So we feel really good about where the hardware component costs are right now, the margins in hardware, as you saw the gross margins improving quite a bit year-over-year.

Okay. And then what does that in turn mean, I guess, for your pricing algorithm with inflation now coming down.

Yes. What we did last year is -- again, like everything else we do, we put our customers first. We actually delivered last year and some of our competitors say they were unable to deliver to their customers. We delivered to our customers. And in many cases, it hit our bottom line. But the flip side of that is now when customers go to order, they come back and order from us because they know we were there, whether it's point of sale, whether it's go, whether it's ATM -- and so we have been able to maintain pricing. What we did last year is we did some surcharging. So we did some expedite surcharge, somebody did something in a time frame and we had to put it on a plane. Our costs went up while we surcharge. We let the customer decide do you really need it that fast or can you wait? And so we pushed through surcharges. Our pricing as we look at our pricing every year, we actually have a pretty sophisticated pricing model. When a graph goes up and prices an ATM, they can see what the market prices are, and they can see what we've been charging what we'll be getting in the market. So that prices have firmed up a little bit in 2023, some of that driven by our competitors being more rational in 2023. But I think the pricing right now is -- we feel pretty good about it.

Okay. Good. And then maybe just returning back to the spin and the RemainCo, less leverage, less, I guess, cash flow. But what are we thinking? And how does that -- are there any inorganic opportunities in that business? Are you thinking about any bolt-ons or as far as just kind of the capital structure of that business?

Yes. I think, again, they're going to go out to spend about 3.25, 3.3x leverage. I do think they're going to continue to focus on delevering somewhat, try to get below 3 in that business. It's going to be pretty good cash flow generator. It's not going to be quite as high going forward as the ATM co side. The point on bolt-on, so we've put money -- our Digital Banking platform right now, we think, is the best one in the industry. It's leverageable, it's scalable. It competes very well. It's winning. We think it's winning as many new flags as anybody on a quarter-over-quarter basis. We think the technology stack. We have no technology debt left in that business. So it's all adding a capability to get new customers. Retail and hospitality, focus on the platform, the NCR Commerce platform, getting customers on that journey. We share with you platform line conversions every quarter. Those have been going quite successfully. It's a small piece of the overall base, but it's working, getting them on the platform with point of sale, getting on the platform [indiscernible], getting them on the platform a software fine store, getting them on platform payments. So one component and then adding on other feature functions. So that's a strategy in those 2 sides. What we're also seeing is a lot of the start-ups, maybe over the last 3 to 5 years, who got in the business with maybe a product and a few customers haven't reached scale. They're subscale. They don't really drive earnings and certainly, they don't have cash flow, and they're probably struggling at the point where I do think there might be some opportunities. I think the teams also have to be careful about trying to maintain the leverage ratio at an acceptable level, closer to 3, that if they have an opportunity to bring something on, and I do think they will at attractive prices. I think they'll be looking out, taking advantage of those opportunities.

Okay. And then on the spin, what's the timing of the spin now? And what needs to get done from a formality standpoint to get this completed and done?

Yes. So the gates that we've been tracking to some regulatory gates, we believe we're pretty close in that -- done with SEC. So as we file, you've seen the Form 10s going out. I think we're very close to being completed with the SEC IRS. We've received our letter ruling of [indiscernible] IRS which is obviously a critical step. We did not anticipate issues, but it's always good to get confirmation. Our internal work to get the teams ready, some of the things we'll do, we'll run with the transition services agreement, some of the technology, the CIOs area. But the go-to-market teams are ready, they're lying. Tim and David have built up the management teams. I've got the boards ready. So the internal activities are done. So regulatory, we're ready. The internal activities are ready. Next big step is to get out and raise the debt stack. And remember RemainCo, we talked about the leverage rate. So they get to keep some of the more attractively priced bonds on that side. So their cost of money is going to be a little bit lower than SpinCo. We have to go raise new balance sheet for SpinCo. We're doing Debt and Equity Investor Day on September 5th, the day after Labor Day, 2 of them, 1 for each team to really present their business strategy, their management teams and to lay out what they expect to see going forward. Immediately thereafter, we're going to get on the road with SpinCo. Tim and the team to -- and Michael, to raise the debt stack. As soon as we get that done, we will then look at declaring a spin date or declaring a dividend date. So we're in really good shape to get that done. We keep saying fourth quarter. We think that will be a really good shape coming out of Labor Day.

Okay. Great. So that was what I had prepared. So I don't know if there's anything you want to say as far as the closing comments because we're pretty much out of time. We have maybe another minute or so. So you guys kind of want to give us a final kind of thoughts or anything that we didn't cover that you'd like to kind of...

I would just reiterate, I think for investors looking at NCR. And the other thing that's been interesting is we talk about NCR as 2 different companies over the last 9 months. People look at it and they say, "Wow, those are 2 really great businesses, #1 market share in ATM, #1 market share in self-service devices, #1 market share in the Allpoint network, #1 market share, we think, in ATM as a Service, #1 market share in hospitality software, #1 market share in retail software, #1 market share in self check-out. We think we're the largest scale #1 player in Digital Banking. So as you start to lay that out, I think people start to see the value of those companies. I think we've seen a lot of people say, I kind of like both of them. They're different. One is going to have a coupon attached in terms of the dividend, stable steady, absolute market share winner on the ATM side. And -- we think it's going to continue to improve market share. On the other side, software platform stacks with great opportunity. If you just keep all of our customers and transition them, your ARPU is going to grow, your margin is going to grow. Both of them, we think, have room to improve margins from around 20 that they're at today. Upward, if you strip out the hybrid stack on RemainCo, it's a pure software play. If you look other software companies in that market, you see that they have a lot of room for margin. And so I think people are going to be a little surprised just understanding it. And I think they're going to be very pleased with where those 2 companies are headed

That's very helpful and certainly an exciting period of time for you guys. And I as investors and sell-side analysts, this is also very exciting for us. So looking forward to the Investor Day. Thank you very much for joining us, and you guys come up with the rest of your one-on-ones today.

Thanks, Ian.

All right. Take care.