NCR Voyix Corporation (VYX) Earnings Call Transcript & Summary

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the NCR Voyix Corporation Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Sarah Jane Schneider, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining our second quarter 2026 earnings conference call. This morning, we issued our earnings release reporting financials for the quarter ended June 30, 2026. A copy of the earnings release that we will reference during this call is available on the Investor Relations section of our website, which can be found at www.ncrvoyix.com and have been filed with the SEC. With me on the call today are Jim Kelly, our Chief Executive Officer; Nick East, our Chief Product Officer; Darren Wilson, President, Retail and Payments; Beimnet Tadele, President, Restaurants; and Brian Webb-Walsh, our Chief Financial Officer. This call is being recorded, and the webcast is available on the Investor Relations section of our website. Before we begin, please be advised that remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC. We caution you not to play undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call and we undertake no obligation to update them. In addition, we will be discussing or providing certain non-GAAP financial measures today, which we believe will provide additional clarity regarding our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this morning and our supplemental materials available on the Investor Relations section of our website. With that, I would now like to turn the call over to Jim. Jim?

Good morning, and thank you for joining us. For the second quarter, revenue increased 1%, adjusting for the ODM transaction; recurring revenue increased 3%; and adjusted EBITDA increased 5% compared to the prior year. These results reflect continued progress across the business, driven by the commercial actions we took last year to strengthen our installed base, combined with continued growth in software, services and payments. We are seeing improved operating performance while building momentum behind our Voyix Commerce platform. our product portfolio is now modernized, creating an integrated cloud-native software payments and services offering that resonates with customers. We now have 10 of the 25 signed VCP customers live across more than 2,000 lanes and expect another 1,000 lanes live in production by the end of September. Customer engagement continues to strengthen. Increasingly, conversations are centered on enterprise-wide platform transformation rather than individual products. Customers are looking for solutions that simplify operations, improve security and provide greater speed and flexibility. We believe our integrated platform is well positioned to meet those needs. Enterprise technology decisions take time. Customers typically move through [indiscernible] with demonstrations, customer lives and finally, commercial agreements. Given the scale of replacing a point-of-sale environment that has often been in place for decades, the time line of this process can vary based upon the size and complexity of the customer. Execution doesn't end with a signed contract, accelerating deployments while reducing implementation cost remains another top priority. During the quarter, we completed our first fully remote Voyix POS installation with a large European grocery retailer in roughly half the time of a traditional deployment. We expect to reduce remote installation times less than 1 hour per store, lowering cost for our customers while significantly increasing our deployment capacity. Nick will discuss how automation and AI are helping us scale even further. In summary, we continue to make solid progress across our strategic priorities, increasing customer adoption, expanding recurring revenue and positioning NCR Voyix for sustainable long-term growth. With that, I will turn the call over to Nick.

Thanks, Jim. Earlier this year, we reached an important milestone with the successful launch of our embedded Voyix commerce platform application portfolio. Our focus has shifted from building the core VCP applications for each of our industry verticals to scaling customer adoption through targeted innovation and the rapid delivery of customer-specific capabilities. Since mid-2025, we have signed 25 VCP contracts reflecting strong demand from both existing and new customers. We also have 16 active customer lives across 7 countries where customers are evaluating our VCP applications as they progress towards commercial agreements. Developments of [indiscernible] next remains on schedule and is expected to begin initial pilots by year-end. Our store-in-a-box solution for small and mid-market restaurants will be available for customer lives by the end of the third quarter followed by pilots in the first quarter of next year. These milestones further expand our deployment pipeline and support future recurring software revenue growth. For existing customers, AI agent dramatically simplify software upgrades to the VCP by analyzing existing environments and seamlessly migrating configurations, application settings and operational data for the platform. The results get faster deployments, lower implementation costs, greater consistency and a highly scalable migration model. After deployment, those same AI agents continue optimizing customer environments, delivering ongoing operational value. Beyond deployments, our innovation strategy is increasingly centered on intelligent automation and agentic AI. At the [ MAX ] coming this October, we'll participate in a fireside discussion with one of the industry's largest pure retailers on how AI and next-generation commerce technologies are reshaping convenience retail and the future of commerce. The event will also showcase the latest innovations across the VCP. We first introduced these AI features at the NRA show in May, demonstrating how computer vision can monitor inventory in real time and automatically trigger actions across point of sale, digital ordering and marketing systems. Since then, we've expanded these capabilities into retail while extending AI across inventory management, supply chain operations, merchandising and back-office workflows. Our industry is evolving beyond systems as simply record transactions. Customers increasingly expect software that understand what's happening across their business recommend actions and execute them autonomously. Our role is to help retailers and restaurants automate their operations, make informed decisions, operate more efficiently and improve performance across the enterprise to delight our customers. With that, I'll turn the call over to Darren.

Thanks, Nick. Our retail business signed more than 40 new customers during the quarter, primarily in the mid-market. Platform and payment sites increased 8% and 13%, respectively, while recurring revenue grew 6% driven by 15% growth in recurring software revenue. In the U.S., we recently signed a Voyix supply chain agreement with LC Food, extending our grocery and CFR capabilities into food distribution. . This win demonstrates the versatility of our VCP applications and further expands our reach into this large adjacent market. Our interest from food and beverage distributors continue to build. We are focused on converting that momentum into additional sales. In Europe, we signed a recurring services agreement in Germany with a leading reverse vending provider, further diversifying our service business. In Latin America, we signed a Voyix POS agreement with a large home improvement retailer in Colombia and Chile. -- further expanding our platform footprint in the region. Finally, in Australia, we secured a large equipment refresh across approximately 350 stores for an existing grocery customer. Following the ODM transaction, we continue to support the hardware needs of our customers. Turning to payments. This quarter, we continued executing our gateway strategy, converting customers in the U.S. and Latin America to Voyix Connect at market pricing. Our certifications continue. We expect to expand this strategy across Canada, Europe and Asia Pacific. Additionally, we signed a new agreement with Voyager to expand fleet card acceptance through Voyix Connect. We now have direct integrations with Voyager, Core pay and WEX, strengthening our convenience and fuel offering. With that, I turn the call over to Benny. .

Thanks, Darren. In the second quarter, our restaurant business signed over 100 new customers. Platform size increased 12% and payment types decreased 1%. Enterprise and mid-market recurring revenue increased 6%, driven by 9% growth in services revenue and 3% growth in software revenue when excluding last year's noncore Brazil divestiture. . Offsetting the performance of our mid-market and enterprise business was a continued softness in SMB. Market interest in the Aloha Next continues to build. During the quarter, we signed an agreement with Pizza Ranch, making them the first new enterprise customers to adopt the Aloha Next. The agreement includes Aloha Next and Voyix Pay across more than 200 locations. Winning in one of the industry's most operationally demanding restaurant segments continues to validate the market-leading technology and related benefits of our cloud-native platform. Internationally, we signed an agreement with one of the largest restaurant operators in Asia Pacific to modernize the Aloha point-of-sale environment and centralized data management across multiple countries and brands. This established a foundation for future adoption of Aloha Next while expanding our footprint across the region. The National Restaurant Association show marked the formal launch of Aloha Next, our modernized restaurant application. Customer reaction was very positive, generating strong engagement that continues to translate into active customer lives and a growing pipeline. Finally, our services business continues to strengthen our revenue base. This quarter, we renewed our relationship with a leading global coffee chain and secured a new engagement with a major global QSR brand to support their technology in the U.S. and Canada. Together, these wins reinforce our position as a trusted partner for many of North America's largest restaurant operators. With that, I'll turn the call over to Brian.

Thank you, Benny, and good morning. For the quarter, total revenue decreased 21% to $523 million, reflecting the transition of the hardware business at the end of Q1. Excluding this impact, total revenue increased 1%, driven by recurring revenue growth of 3%. Within recurring revenue, software increased 6% and services increased 1%, supported by actions taken last year to correct efficiencies and legacy agreements in addition to our payments initiatives and new product sales. Platform sites increased 10% to 85,000 and payment sites increased 2% to 8,500. Importantly, our platform site metric primarily represents legacy point-of-sale applications tied to subscription contracts. Beginning in 2027, we will provide updated metrics that reflect the sale of our modernized point-of-sale and related solutions. This, along with our remaining contract value will be more indicative of future financial performance. Adjusted EBITDA of $98 million increased 5%, driven by revenue growth, coupled with our cost actions. Adjusted EBITDA margin expanded 460 basis points to 18.7%, reflective of the hardware transition, revenue growth and efficiency actions. Excluding the hardware impact, adjusted EBITDA margin expanded 80 basis points. Non-GAAP EPS of $0.17 per share was flat year-over-year due to a higher tax rate as the prior year period benefited from a onetime tax benefit. GAAP EPS was a loss of $0.03 per share in the quarter, primarily due to restructuring and transformation in addition to stock-based compensation and amortization of intangibles. In the second quarter, we signed 4 mid-market contracts for our embedded VCP applications, bringing our total customers to 25. Our VCP contracts represent $286 million of remaining contract value, up 65% year-over-year. Turning to our segment results. Reported retail revenue decreased 20% to $365 million, which reflects the hardware transition. Excluding this impact, retail revenue increased 4% driven by 6% growth in recurring revenue from VCP application sales and payments pricing initiatives. Retail adjusted EBITDA increased 20% to $97 million, driven by revenue growth coupled with our cost initiatives, adjusted EBITDA margin increased 880 basis points year-over-year to 26.6% due to a combination of the hardware transition, revenue growth and our efficiency actions. Excluding the hardware impact, retail margin increased 350 basis points. Turning to restaurants. Reported revenue declined 23% to $158 million, reflective of the hardware transition. Excluding this impact, restaurant revenue declined $10 million or 6% in the quarter. The decline was driven by lower-than-anticipated hardware installations as customers have delayed refreshes likely into next year, declines in SMB and the divestiture in Brazil. We expect the SMB trend to moderate as we launch our store-in-the-box solution, which Nick outlined in his remarks. Restaurant adjusted EBITDA decreased 15% to $58 million, driven by lower revenue and mix. Adjusted EBITDA margin was 36.7%, an increase of 350 basis points year-over-year due to the hardware transition. Excluding this impact, restaurant margin decreased 380 basis points. Lastly, corporate expenses were $57 million for the quarter, and we expect this to remain relatively consistent for the balance of the year. As a reminder, in the third quarter of 2025, corporate expenses benefited from the completion of the [indiscernible] transition service agreements resulting in lower prior year expenses. Adjusted free cash flow was $56 million for the quarter before restructuring. This quarter benefited from working capital improvements, including cash inflows related to the hardware transition. Restructuring outflows of $30 million were lower than expected due to a delayed $24 million payment for litigation, which was subsequently paid in July. We invested $41 million in capital expenditures and continue to expect our CapEx for the year to be similar to 2025. We repurchased approximately $11 million of common shares during the quarter. We ended the quarter with a net leverage position of 2x based on our net debt at June 30 and the last 12 months adjusted EBITDA. Turning to our full year 2026 outlook. We are maintaining the guidance we provided in May and expect revenue to be between $2.188 billion and $2.303 billion and adjusted EBITDA to be between $432 million and $447 million with adjusted EPS between $0.89 and $0.92. I'll now turn the call over to the operator for Q&A.

[Operator Instructions] Your first question is from Kartik Mehta with Northcoast Research.

Jim, last quarter, you said you had, I think, 22 wins for the VCP platform. I'm wondering, as you talk to customers, are you seeing the adoption accelerate and just what you're seeing or hearing from your customers as regards to their desire to adopt the new platform. .

Actually, I was at dinner last night with Darren and Benny and Nick, with a customer. I think I saw 6 customers last week, all of which are either already in a pilot or one of them is a pilot, the rest of them are coming here to see the new CEC that we've talked about before. I would say the feedback across all the customers I've seen, which is well over 100 are very excited about the fact that NCR has this new application based on their existing infrastructure. Not having to change a point of sale since we're essentially giving them the same one, just modernized and not having to retrain their staff and all the other stuff that we've said in the past has been very positive. I think the recognized, though, for restaurants, we only launched it officially in May and January for retail. While we did have some sales early last year kind of presales of the product, these are very large enterprise organizations, many of them are multinational. So you're dealing with organizations spread around the world. So my expectation is you'll continue to see -- we'll continue to see that number move up. I don't know they don't -- this is the RCV. I don't know that it will ever be completely linear. It's not a revenue growth. This is selling multiyear contracts to existing customers. But even on the new side, if you just do a count of customers over 20% of what we've signed to date, reflects new relationships for the company. So I think we feel as positive as ever in the trajectory and the acceptance of the product, again, recognizing that in some of the markets, I think we are, I think, now at 2,000 lanes, predominantly in grocery. So CFR restaurants, we just sold a supply chain, which was the first one, which is a segment we've never talked about before, but we have a pretty significant place in supply chain as well. So this is still early days and I'm extremely optimistic about the trajectory of where we're going.

Jim, and then I think Nick talked about it too, which is using AI and automation for installs. Does that, in the future, quicken booking to revenue because you're able to install these so much quicker. .

Yes. I'll let Nick cover. But that, as I said in my comments, as did Nick, I think that's a big differentiator for the future. which is using agents to be able to read the legacy and for existing customers and install, but I'll let him give you more color.

Yes, Kartik, the rate at which you can get a customer live after adoption, either migrated from our existing software or moving to the new -- net new customers moving to our platform really depends on the customer size and complexity. So we talked about store-in-a-box, restaurant-in-the-box at the bottom end of the market, the idea is that we get them installed immediately. You ship it out, you unbox it, it's preconfigured and you're up and running straight away. So the gap between bookings and then driving the go-live is virtually 0 for the really large complex multinational customers, there's a project to do. And that's where we've been working really hard on AI agents to do exactly what you say. So imagine you've got a customer with a complicated menu, catalog, a whole set of pricing and promotion than what AI agents are helping us to do with our migration blueprint tools is analyze the existing, create the capability to automate the configuration over to the new platform. That part of it, what we've also been able to do this quarter is also accelerate deployment through remote installation, even in some of the most complex environments. And I think it's also surprised the IT teams of our largest customers. That we can convert, for example, a very large grocery store for the old to the new in a couple of hours overnight without a single person on site. So I think the combination of AI tools and some of the automation we've built into the platform, means that we are definitely accelerating the rate at which customers can go live.

Yes. The way I would describe it, Kartik simplistically for me, I'm not as sophisticated in this as Nick is this like when you get a new iPhone out of the box, you put one against the other, and it transfers all the existing information over to the new. And we're able to do that even with an on-prem application for the cloud applications that we already have. We've already perfected that process. So it's important to the customers because the way it's been done historically takes a long period of time and a lot of resources. This is short on resources, and it's going to be a lot less expensive for them. I mean it will be profitable for us because it's predominantly a software application, but we are -- I think that's part of the pitch to customers as well as they come in and they say, what's the effort to be able to move it over. And I think you know the last thing is, as you know, we're also -- the contracts we're signing are multiyear contracts. These are traditional subscription. It's different to what the company has done historically, which more is a as they open a store, then it drives revenue. That's no longer the model for the company.

Your next question comes from Mayank Tandon with Needham & Company.

This is Brandon on for May. To kind of build off the last question, I'm just wondering if you can talk about the overall visibility in the guide as you enter the back half of the year, taking into account like the macro as well as the new like product ramps in RV. .

Yes. I think as you follow the company, our installed base is -- half of it is services. These are today, multiyear contracts. So visibility is generally pretty strong relative to the primary drivers, which is software and services today. Payments is a much smaller piece, at least currently. And since hardware is not being reported, that's been historically the area is very lumpy. It still has an impact of -- I think it did this quarter restaurants delayed purchases. So there is some impact to us, I guess, relative to economy. But generally, as we said in the guidance, that we are maintaining the guidance we gave at the beginning of the year.

Okay. I was just wondering if you can talk about the demand for the new platform. I know it's early, but in terms of verticals, are you seeing anything different on the go-to-market side versus restaurant and retail and SME and enterprise? .

Yes. I'll let some of the other guys add to this. Just coming back to what I said earlier. Traditionally, I think we talk about grocery and CFR predominantly, but the company has -- I guess, restaurant, but we have other verticals that have not been getting any attention in the past, but as a result of our project F1, where we've modernized those primary applications, we've modernized the entire suite of what the company has owned over the years. And that's one of the reasons, as I mentioned, we just had a press release out, I believe we did, a press release out for supply chain. So that's a vertical we've not spoken on these calls yet or we will have a release out. So I think the strength of each of the verticals look very good, as I mentioned earlier, but I don't know, Darren, do you want to...

Yes, sure. I think we're seeing consistent demand across the verticals. As I put in my prepared remarks, we signed more than 40 customers in the mid-market spanning all the verticals kind of referenced or that are core focal area, adding on supply chain, as Jim said. But equally, as also announced, we're starting to get that traction on payments as well with the Voyix Connect signings that I referenced. So good, healthy trends across all our existing customers but also new logos, as Jim touched on, with the 20% of the business being from new logos. So yes, good go-to-market traction. The -- we're very focused on demoing the new products, both at shows, but also through our customer experience centers around the world. and that is receiving very, very positive feedback. I pass over to Benny.

Yes. So on the restaurant side, I would describe the market as cautiously optimistic. I think the pressure on cost, like Jim described continues for them. So there's a lot of focus on bottom line improvement and efficiencies. Traffic largely back is what we're seeing, but at the same time, consumer spend is still stretched. And you hear from restaurants costs on food or even insurance and energy, things like that. . And it's doing a couple of things for us. As you look at the mid-market and enterprise segment, that is now a very heavy focus on ROI buying journey. So not necessarily a spending freeze, but what does create return on investment from efficiency on the operations side, AI, automation, ease of training and onboarding of resources augmentation resources. So on that side, what we see is maybe a tad longer of buying journey as the buying committee have more scrutiny on what returns the best for their investment. But it aligns very well with our value proposition on Aloha Next and the wider platform strategy. And in fact, since we launched Aloha Next at NRA, I've been very encouraged by the moment and we're seeing similar to what Darren described, we've had a number of demos that I talked about in the prepared remarks. We have a number of lives going on and in some, having contractual discussions also on track to go live by the end of this year. So all of that is very encouraging in terms of what we're seeing in the market. On the SMB end of the market, it's a very different buying journey, a very cost-sensitive and economic sensitive as well as simplicity of deployment and in management of the solution. Hence, why we're bringing the Aloha Next restaurant in a box solution to really align with that segment buying behavior as well as operational behavior. So as we launch that, I feel very good about that as well.

Maybe I'd add 1 thing, Brian. If I look across retail and restaurants, and there's some very specific customer conversations you've had recently, exactly what Aron and many have both said, the advantage we have with customers who have both retail and restaurants, and there are a lot of them, right? There's a real convergence between -- particularly in the convenience market between food offerings and convenience. So what they're looking to do under this sort of slightly pressurized consumer market is reduce cost and find synergies but also find ways of driving revenue up and loyalty and value for each of those customers. One of the things there is customer last week who was so interested in our ability to do that across the new platform because the technology stack allows us to combine our retail and restaurant operations and drive synergy that they're flying at tomorrow to delve into that so that we can drive that cost synergy for them, but also be able to do more cross-sell and hub sell. So I think there are some -- some compression in the market is also opportunity to help use technology to drive out costs and drive our customer value, and we're getting a lot of interest from customers in that market to do that.

Your next question is from Matt Summerville with D.A. Davidson.

Just a couple of questions. I know you touched on RCV, but I wanted to double back to that. How should we expect RCV that metric to kind of play out from here? We saw a year-on-year deceleration in Q2 relative to the growth you saw in Q1. We saw a little bit of a sequential decline what conclusions should we be drawing from this newer metric you're providing? And how should that metric evolve from here? .

Yes. So the metrics will grow over time as I mentioned earlier, it's not completely linear. So if I sign 4 customers that are relatively small compared to some of the largest customers that we've already signed, then the number either stagnates or in this case, goes down because RCV also represents is revenue. So that's the earnings that are going to start coming into the company because they start immediately on signing of the contract. So that has a natural tendency to decline. It goes up by signing additional contracts. It represents less than maybe 6% of our installed base. So it's still in its infancy. And I would -- I don't know that you can expect -- I mean I'd like to expect, but I know you can expect every quarter, it's going to go up sequentially in the exact same way. These are very large organizations. They are multinational, most of them or at least a large segment of them. And the conversations are early. So I think as this year progresses and into next year, those numbers will continue to rise, but at the same time, there is a downward pressure because that represents the revenue that we will start recording the software part of the revenue. It does not include the services. It does not include payments. Obviously, it does not include hardware sales. So this is just isolating software under long-term multiyear contracts. So I have no doubt you'll continue to see it move up. I just don't know every single quarter. It will be linear or it will be a compare that makes logical sense because if you think about it, these are specific companies that are moving to this contract to these -- for our existing base moving to this -- these new applications. But as I mentioned earlier as well, that we've got, I think, 20% of what we've signed thus far in terms of customers are new to NCR entirely.

Got it. And then as a follow-up. -- any -- how should we be thinking about the remaining sort of revenue and EBITDA cadence across the 2 businesses in Q3 and Q4. And I say that in the sense that I know there's some timing on product launches, et cetera. So how does the rest of the year kind of play out in the businesses? .