# NCR Voyix Corp: Form 10-Q for the period ended Jun 30, 2024

- Company: [NCR Voyix Corp](/companies/vyx.md) (CIK 70866)
- Form: 10-Q
- Filed: 2024-08-06
- Accepted by EDGAR: Aug 6, 2024, 16:06 ET
- Period: 2024-06-30
- Accession: 0000070866-24-000031
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/70866/000007086624000031/ncr-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/70866/000007086624000031/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $876.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $1.73bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $55.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $115.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-04-01 to 2024-06-30 | $140.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-01-01 to 2024-06-30 | $271.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$4.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | $1.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $41.0m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $80.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $24.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $10.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$73.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$113.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.53 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.84 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.53 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.84 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 145,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 144,300,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | $27.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $21.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-06-30 | $204.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $1.06bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $4.78bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $1.25bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $4.59bn | us-gaap:Liabilities |
| Long-term debt | at 2024-06-30 | $2.60bn | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2024-06-30 | $15.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-06-30 | −$85.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 69,225 characters.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included under Item 1. Financial Statements of this Quarterly Report and our Consolidated Financial Statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

Our discussion within MD&A is organized as follows:

- *Overview.* This section contains background information on our company, summary of significant themes and events during the quarter as well as strategic initiatives and trends in order to provide context for management’s discussion and analysis of our financial condition and results of operations.
- *Results of operations.* This section contains an analysis of our results of operations presented in the accompanying condensed consolidated statements of income by comparing the results for the three and six months ended June 30, 2024 to the results for the three and six months ended June 30, 2023.
- *Liquidity and capital resources.* This section provides an analysis of our cash flows and a discussion of our contractual obligations at June 30, 2024.

### OVERVIEW

### BUSINESS OVERVIEW

NCR Voyix Corporation (“Voyix”, “NCR”, the “Company”, “we” or “us”), which, prior to its name change effective October 13, 2023 was known as NCR Corporation, was originally incorporated in 1884 and is a global provider of digital commerce solutions for retail stores, restaurants and financial institutions. Headquartered in Atlanta, Georgia, we are a software and services-led enterprise technology provider of run-the-store capabilities for retail and restaurants and cloud-based digital solutions for financial institutions, serving businesses of all sizes. Our software platforms, which run in the cloud and include microservices and APIs that integrate with our customers’ systems, and our As-a-Service solutions enable an end-to-end technology-based operations solution for our customers. Our offerings include digital first software and services offerings for retailers, restaurants and financial institutions, as well as payments acceptance solutions, multi-vendor connected device services, self-checkout (“SCO”) kiosks and related technologies, point of sale (“POS”) terminals and other self-service technologies. Our solutions are designed to enable restaurants, retailers, and financial institutions to seamlessly transact and engage with their customers and end users.

#### Completion of NCR Atleos Spin-Off Transaction

On October 16, 2023, the Company completed the spin-off (“Spin-Off”) of its ATM-focused businesses, including the self-service banking, payments & network and telecommunications and technology businesses, into an independent, publicly traded company, NCR Atleos (“NCR Atleos”), on a tax-free basis. Accordingly, the historical financial results of NCR Atleos are reflected as discontinued operations in the Company’s consolidated financial statements. The 2023 presentation of discontinued operations has been updated to reflect the results of operations for the countries that transferred to NCR Atleos in the first quarter of 2024 and excludes the countries that have not yet transferred to NCR Atleos as of June 30, 2024. The results of operations for the countries that have not yet transferred will be presented as part of discontinued operations as of the date of their separation. As of December 31, 2023, there were seven countries that had not yet transferred to NCR Atleos. During the three months ended March 31, 2024, three of these delayed countries transferred to NCR Atleos, and during the three months ended June 30, 2024, two additional delayed countries transferred to NCR Atleos. Refer to Note 2, “Discontinued Operations”, in the Notes to Consolidated Financial Statements in Item 1 of this Report, for additional information.

#### Sale of Digital Banking Business

On August 6, 2024, the Company entered into a definitive agreement with an affiliate of The Veritas Capital Fund VIII, L.P. (the “Buyer”) pursuant to which the Buyer agreed to purchase the Company’s Digital Banking segment businesses (the “Digital Banking Sale”). The purchase price for the transaction consists of $2.45 billion in cash, subject to a post-closing adjustment, as well as contingent consideration of up to an additional $100 million in cash upon the achievement of a specified return on the Buyer's invested capital at the time of any future sale. The Digital Banking Sale represents the next step in the Company’s efforts to streamline its operations to focus specifically on its core software and services offerings for restaurants and retailers around the world. The Digital Banking Sale is expected to close by the end of fiscal year 2024, subject to receipt of necessary regulatory approvals and other customary closing conditions. Upon closing of the Digital Banking Sale, the Company expects to use the net proceeds primarily to reduce debt, including outstanding amounts under the term loan facility and Revolving Credit Facility, repurchases of certain senior unsecured notes, and termination of the trade receivables facility.

As a result of the Digital Banking Sale, we expect our Digital Banking segment to be presented as a discontinued operation in the third quarter of fiscal 2024. Following the closing of the Digital Banking Sale, the Company expects to manage and report its businesses in the following two reportable segments: Retail and Restaurants.

#### Transition of Hardware Business to ODM Model

On August 6, 2024, the Company announced its entry into a commercial agreement with Ennoconn Corporation (“Ennoconn”) to transition its self-checkout and point-of-sale hardware businesses to an outsourced design and manufacturing model, including the sale of certain assets relating to these businesses (the “Hardware Business Transition”). Under the terms of the agreement, Ennoconn will design, manufacture, warrant, supply and ship self-checkout and point-of sale hardware directly to the Company’s customers and the Company will sell hardware to its customer as a sales agent for Ennoconn and continue to provide its point-of sale and self-checkout software as well as key support and maintenance services.

The Hardware Business Transition is expected to be fully implemented by early 2025 and, as a result of the Hardware Business Transition, the Company expects to record commission revenue from point-of-sale and self-checkout hardware sales as an agent for Ennoconn on a net basis, excluding the costs paid to Ennoconn.

#### Our Segments

Subsequent to the Spin-Off, the Company manages and reports the following segments:

- *Retail* - Our Retail segment is focused on serving retailers of all sizes, from local businesses to some of the most recognized brands in the world. Our software and solutions connect to a modern technology platform that allows retailers to run their stores like they run their digital channels, improving the experience for their customers. These solutions are designed to improve operational efficiency, sales productivity, customer satisfaction and purchasing decisions; provide secure checkout processes and payment systems; and increase service levels.
- *Restaurants* - Our Restaurants segment is focused on serving restaurants and food service establishments of all sizes, ranging from small and medium-sized businesses to some of the world’s top global food service enterprises. Our solution portfolio spans across table-service, quick-service and fast casual industries, providing competitive end-to-end solutions to “run-the-restaurant.” Our solution portfolio offers cloud-based, platform-enabled technology that is designed to improve operational efficiency, increase customer satisfaction, streamline order and transaction processing and reduce operating costs. In addition, we deliver service support, allowing our customers to focus on their core competencies. Our end-to-end services are a strong differentiating factor within the market.
- *Digital Banking* - Our Digital Banking segment serves financial institutions by delivering software solutions which enable a fully integrated digital experience for consumer and business customers across all channels. We serve banks and credit unions in the United States with our cloud-based software solutions including account opening, account management, transaction processing, imaging, and branch services, among others. We are unique in our ability to offer unified banking solutions across digital (application and browser), in-branch and via interactive teller machines (“ITMs”). See our discussion above under “—Sale of Digital Banking Business” for information regarding our expected segments following the Digital Banking Sale.

Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to any of our three individual reportable segments along with certain non-strategic businesses that are considered immaterial operating segment(s) and certain countries which are expected to transfer to NCR Atleos during the remainder of 2024, as well as commercial agreements with NCR Atleos.

### SIGNIFICANT THEMES AND EVENTS

The following were significant themes and events for the second quarter of 2024.

- Revenue of $876 million, down 7% compared to the prior year period
- Recurring revenue, increased 2% as compared to the prior year period and comprised 62% of total consolidated revenue
- Software and services revenue, decreased 3% as compared to the prior year period and comprised 75% of total consolidated revenue
- Adjusted EBITDA of $144 million, down 14% compared to the prior year period

#### Cyber Ransomware Incident

As previously disclosed, on April 13, 2023 the Company determined that a single data center outage impacting certain of its commerce customers was caused by a cyber ransomware incident. Upon such determination, the Company immediately started contacting customers, enacted its cybersecurity protocol and engaged outside experts to contain the incident and begin the recovery process. We concluded that this incident impacted operations for some customers only with respect to specific Aloha cloud-based services and Counterpoint. Our investigation also concluded no financial reporting systems were impacted. As of June 30, 2024, the Company has incurred $44 million of expenses related to the cyber ransomware incident and has recovered $20 million under our insurance policies. As of June 30, 2024, we expect to receive an additional $5 million which was recorded as an insurance receivable. We are still pursuing insurance recoveries for the remaining costs. We may incur additional costs relating to this incident in the future, including expenses to respond to this matter, payment of damages or other costs to customers or others. At this time we do not believe additional costs incurred as a result of the incident will ultimately have a material adverse effect on our business, results of operations or financial condition; however, we remain subject to risks and uncertainties as a result of the incident.

#### Out-of-period adjustments

In the first quarter of 2023, the Company recorded a $10 million out-of-period adjustment to increase operating expenses and an employee-related liability in order to correct for an understatement of such same balances during the fourth quarter of 2022.

In the second quarter of 2024, the Company recorded an out-of-period correction to decrease revenue by $10 million, decrease accounts receivable by $5 million, and increase contract liabilities by $5 million. The adjustment is not expected to be material to the full year results of operations for 2024.

During the second quarter of 2024, the Company recorded corrections related to the Spin-Off. As of December 31, 2023, total assets were understated by approximately $12 million, total liabilities were overstated by approximately $7 million, and total equity was understated by approximately $19 million. The Company evaluated the impact of these adjustments and concluded they were not material to any previously issued interim or annual consolidated financial statements.

#### ACH Disbursements

In February 2024, the Company identified fraudulent automated clearing house “ACH” disbursements from a Company bank account. The cumulative amount of these disbursements total $34 million, and during the six months ended June 30, 2024, we recovered $13 million related to this matter. The Company is pursuing insurance recoveries for the remainder; however, there can be no assurance that the Company will be successful in recovering additional amounts of the unauthorized ACH disbursements from the Company’s insurance providers. Although not materially impacting any previously reported periods, the misstatements resulted in the revision of interim periods in 2023.

### STRATEGIC INITIATIVES AND TRENDS

As a leading technology company, we seek to maintain our market position by expanding our share of wallet among existing customers and attracting new customers, leveraging our cloud-based, platform-enabled software and services offerings. We believe there is considerable opportunity to grow with new and existing customers as retailers and restaurants are increasingly adopting technology and support services to enhance and transform their operations. As digital adoption becomes increasingly important for businesses to engage with their end-users, we are investing in innovation to attract and retain customers across our segments. Our ability to create experiences that ultimately improve end-user satisfaction through a combination of innovation and service is a competitive strength of the Company. In order to provide long-term value to all our stakeholders, we set complementary business goals and financial strategies. Execution of these is driven by the following key pillars: (i) focus on our customers; (ii) leverage our brand (and global distribution); (iii) support customers through innovation; and (iv) allocate our capital strategically through a cost-disciplined approach to operations. We also plan to continue to improve our execution to drive solid returns and to transform our business to enhance value for all stockholders.

### Macroeconomic Trends

Given the multinational nature of our business, we are subject to risks and exposures from the evolving macroeconomic environment, including the effects of increased global inflationary pressures and interest rates, fluctuations in foreign currency exchange rates, political economic slowdowns or recessions and geopolitical pressures, including the unknown impacts of current and future trade regulations. We continuously monitor the direct and indirect impacts of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape. For example, foreign currency exchange rate fluctuations may negatively impact our financial results during the reporting period.

As we continue to execute on our strategy to shift to recurring revenue, our revenues and earnings will become more predictable; however, the broader implications of these macroeconomic events on our business, results of operations and overall financial position, particularly in the short term, remain uncertain.

For further discussion of trends, uncertainties and other factors that could affect our operating results, refer to Part I, Item 1A, “Risk Factors”, contained in our 2023 Form 10-K and subsequent filings we make within the SEC.

### Results from Operations

### For the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023

### Consolidated Results

The following tables show our results for the three and six months ended June 30, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.

*In millions*

|  | Three months ended June 30 2024 | 2023 | Percentage of Revenue (1) 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Product revenue | **$256** | $311 | **29.2%** | 32.9% | (18)% |
| Service revenue | **620** | 635 | **70.8%** | 67.1% | (2)% |
| **Total revenue** | **876** | 946 | **100.0%** | 100.0% | (7)% |
| Product gross margin | **24** | 42 | **9.4%** | 13.5% | (43)% |
| Service gross margin | **167** | 222 | **26.9%** | 35.0% | (25)% |
| **Total gross margin** | **191** | 264 | **21.8%** | 27.9% | (28)% |
| Selling, general and administrative expenses | **140** | 167 | **16.0%** | 17.7% | (16)% |
| Research and development expenses | **55** | 42 | **6.3%** | 4.4% | 31% |
| **Income (loss) from operations** | **$(4)** | $55 | **(0.5)%** | 5.8% | (107)% |

*In millions*

|  | Six months ended June 30 2024 | 2023 | Percentage of Revenue (1) 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Product revenue | **$488** | $599 | **28.1%** | 32.3% | (19)% |
| Service revenue | **1,246** | 1,253 | **71.9%** | 67.7% | (1)% |
| **Total revenue** | **1,734** | 1,852 | **100.0%** | 100.0% | (6)% |
| Product gross margin | **57** | 63 | **11.7%** | 10.5% | (10)% |
| Service gross margin | **330** | 425 | **26.5%** | 33.9% | (22)% |
| **Total gross margin** | **387** | 488 | **22.3%** | 26.3% | (21)% |
| Selling, general and administrative expenses | **271** | 322 | **15.6%** | 17.4% | (16)% |
| Research and development expenses | **115** | 91 | **6.6%** | 4.9% | 26% |
| **Income (loss) from operations** | **$1** | $75 | **0.1%** | 4.0% | (99)% |

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for product gross margin and service gross margin, which are divided by the related component of revenue.

### Key Strategic Financial Metrics

The following tables show our key strategic financial metrics for the three and six months ended June 30, the relative percentage that those amounts represent to total revenue, and the change in those amounts year-over-year.

### Recurring revenue as a percentage of total revenue

|  | Three months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Recurring revenue(1) | **$544** | $535 | **62.1%** | 56.6% | 2% |
| All other products and services | **332** | 411 | **37.9%** | 43.4% | (19)% |
| **Total Revenue** | **$876** | $946 | **100.0%** | 100.0% | (7)% |

*In millions*

|  | Six months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Recurring revenue (1) | **$1,076** | $1,059 | **62.1%** | 57.2% | 2% |
| All other products and services | **658** | 793 | **37.9%** | 42.8% | (17)% |
| **Total Revenue** | **$1,734** | $1,852 | **100.0%** | 100.0% | (6)% |

(1) Recurring revenue includes all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, cloud revenue, payment processing revenue and certain professional services arrangements as well as term-based software license arrangements that include customer termination rights.

### Revenue by type

*In millions*

|  | Three months ended June 30 2024 2023 | Percentage of Total Revenue 2024 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: |
| Software and services revenue | **$656** $679 | **74.9%** 71.8% | (3)% |
| Hardware revenue | **220** 267 | **25.1%** 28.2% | (18)% |
| **Total Revenue** | **$876** $946 | **100.0%** 100.0% | (7)% |
|  | **Six months ended June 30** | **Percentage of Total Revenue** | **Increase (Decrease)** |
| **In millions** | **2024** **2023** | **2024** **2023** | **2024 vs 2023** |
| Software and services revenue | **$1,318** $1,323 | **76.0%** 71.4% | —% |
| Hardware revenue | **416** 529 | **24.0%** 28.6% | (21)% |
| **Total Revenue** | **$1,734** $1,852 | **100.0%** 100.0% | (6)% |

### Net income (loss) from continuing operations attributable to NCR Voyix and Adjusted EBITDA(2) as a percentage of total revenue

*In millions*

|  | Three months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net income (loss) from continuing operations attributable to NCR Voyix | **$(74)** | $(51) | **(8.4)%** | (5.4)% | (45)% |
| Adjusted EBITDA | **$144** | $168 | **16.4%** | 17.8% | (14)% |

(2) Refer to our definition of Adjusted EBITDA in the section entitled “Non-GAAP Financial Measures and Use of Certain Terms.”

*In millions*

|  | Six months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net income (loss) from continuing operations attributable to NCR | **$(113)** | $(123) | **(6.5)%** | (6.6)% | (8)% |
| Adjusted EBITDA | **$265** | $286 | **15.3%** | 15.4% | (7)% |

### Non-GAAP Financial Measures and Use of Certain Terms:

*Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)* Our management uses the non-GAAP measure Adjusted EBITDA because it provides useful information to investors as an indicator of strength and performance of the Company’s ongoing business operations, including funding discretionary spending such as capital expenditures, strategic acquisitions, and other investments. We determine Adjusted EBITDA based on GAAP net income (loss) from continuing operations attributable to NCR Voyix plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization (excluding acquisition-related amortization of intangibles); plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments and other special items, including amortization of acquisition-related intangibles, acquisition-related costs, loss (gain) on disposal of businesses, separation-related costs, cyber ransomware incident recovery costs, net of insurance recoveries, fraudulent ACH disbursements costs, net of recoveries, foreign currency devaluation, transformation and restructuring charges (which includes integration, severance and other exit and disposal costs), and strategic initiative costs, among others. The special items are considered non-operational or non-recurring in nature, so are excluded from the Adjusted EBITDA metric utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income (loss) from continuing operations attributable to NCR Voyix. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by our management to make decisions regarding the segments and to assess our financial performance. Refer to the table below for the reconciliations of net income (loss) from continuing operations attributable to NCR Voyix (GAAP) to Adjusted EBITDA (non-GAAP).

Our definitions and calculations of these non-GAAP measures may differ from similarly-titled measures reported by other companies and cannot, therefore, be compared with similarly-titled measures of other companies. These non-GAAP measures should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.

*In millions*

|  | Three months ended June 30 2024 | 2023 | Six months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Net income (loss) from continuing operations attributable to NCR Voyix (GAAP)** | **$(74)** | $(51) | **$(113)** | $(123) |
| Depreciation and amortization (excluding acquisition related amortization of intangibles) | **70** | 61 | **136** | 120 |
| Acquisition-related amortization of intangibles | **15** | 18 | **29** | 35 |
| Interest expense | **41** | 91 | **80** | 174 |
| Interest income | **(1)** | (3) | **(3)** | (6) |
| Acquisition-related costs | **—** | 1 | **—** | 1 |
| Income tax expense (benefit) | **24** | 7 | **10** | 12 |
| Stock-based compensation expense | **14** | 25 | **27** | 50 |
| Transformation and restructuring costs(1) | **51** | 3 | **79** | 6 |
| Separation costs(2) | **3** | 6 | **8** | 8 |
| Loss (gain) on disposal of businesses | **(7)** | (4) | **(14)** | (7) |
| Foreign currency devaluation(3) | **—** | **—** | **15** | **—** |
| Fraudulent ACH disbursements(4) | **(1)** | 3 | **(2)** | 5 |
| Cyber ransomware incident recovery costs(5) | **(4)** | 11 | **(4)** | 11 |
| Strategic initiatives(6) | **13** | — | **17** | — |
| **Adjusted EBITDA (non-GAAP)** | **$144** | $168 | **$265** | $286 |

(1) Represents integration, severance, and other exit and disposal costs which are considered non-operational in nature.

(2) Represents costs incurred as a result of the Spin-Off. Professional fees to effect the spin-off of NCR Atleos including separation management, organizational design, and legal fees have been classified within discontinued operations during the three and six months ended June 30, 2023.

(3) Represents gains and losses recognized during the quarter due to changes in valuation of the Lebanese pound and the Egyptian pound.

(4) Represents company identified fraudulent ACH disbursements from a company bank account, net of recoveries. Additional details regarding this item are discussed in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”.

(5) Represents expenses to respond to, remediate and investigate the April 13, 2023 cyber ransomware incident, net of insurance recoveries. Additional details regarding this cyber ransomware incident are discussed in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”.

(6) Represents professional fees related to strategic initiatives which are considered non-operational in nature.

### Revenue

*In millions*

|  | Three months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Product revenue | **$256** | $311 | **29.2%** | 32.9% | (18)% |
| Service revenue | **620** | 635 | **70.8%** | 67.1% | (2)% |
| **Total revenue** | **$876** | $946 | **100.0%** | 100.0% | (7)% |

*In millions*

|  | Six months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Product revenue | **$488** | $599 | **28.1%** | 32.3% | (19)% |
| Service revenue | **1,246** | 1,253 | **71.9%** | 67.7% | (1)% |
| **Total revenue** | **$1,734** | $1,852 | **100.0%** | 100.0% | (6)% |

Product revenue includes our hardware and software license revenue streams. Service revenue includes hardware and software maintenance revenue, implementation services revenue, cloud revenue, payments processing revenue as well as professional services revenue.

#### For the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023

Total revenue decreased 7% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Product revenue for the three months ended June 30, 2024 decreased 18% compared to the three months ended June 30, 2023 due to a decline in SCO and POS hardware revenues and a decrease in software license revenues. Service revenue for the three months ended June 30, 2024 decreased 2% compared to the three months ended June 30, 2023 due to a decrease in payment processing services revenue due to the divestiture at the end of 2023.

Total revenue decreased 6% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Product revenue for the six months ended June 30, 2024 decreased 19% compared to the six months ended June 30, 2023 due to a decline in SCO and POS hardware revenues partially offset by an increase in software license revenue. Service revenue for the six months ended June 30, 2024 decreased 1% compared to the six months ended June 30, 2023 due to a decrease in payment processing services revenue due to the divestiture at the end of 2023.

### Gross Margin

*In millions*

|  | Three months ended June 30 2024 | 2023 | Percentage of Revenue (1) 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Product gross margin | **$24** | $42 | **9.4%** | 13.5% | (43)% |
| Service gross margin | **167** | 222 | **26.9%** | 35.0% | (25)% |
| **Total gross margin** | **$191** | $264 | **21.8%** | 27.9% | (28)% |

(1) The percentage of revenue is calculated for each line item divided by the related component of revenue.

#### For the three months ended June 30, 2024 compared to the three months ended June 30, 2023

Gross margin as a percentage of revenue in the three months ended June 30, 2024 was 21.8% compared to 27.9% in the three months ended June 30, 2023. Gross margin for the three months ended June 30, 2024 included $24 million of transformation and restructuring costs, $4 million of stock-based compensation expense and $5 million of amortization of acquisition-related intangible assets, offset by $5 million of net recoveries related to the cyber ransomware incident. Gross margin for the three months ended June 30, 2023 included $1 million of transformation and restructuring costs, $2 million of stock-based compensation expense, $11 million of amortization of acquisition-related intangible assets and $5 million of cyber ransomware incident recovery costs. Excluding these items, gross margin as a percentage of revenue decreased from 2023 to 2024 related to a decline in gross margin related to payments processing services due to the divestiture at the end of 2023.

*In millions*

|  | Six months ended June 30 2024 | 2023 | Percentage of Revenue (1) 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Product gross margin | **$57** | $63 | **11.7%** | 10.5% | (10)% |
| Service gross margin | **330** | 425 | **26.5%** | 33.9% | (22)% |
| **Total gross margin** | **$387** | $488 | **22.3%** | 26.3% | (21)% |

#### For the six months ended June 30, 2024 compared to the six months ended June 30, 2023

Gross margin as a percentage of revenue in the six months ended June 30, 2024 was 22.3% compared to 26.3% in the six months ended June 30, 2023. Gross margin for the six months ended June 30, 2024 included $34 million of transformation and restructuring costs, $7 million of stock-based compensation expense and $9 million of amortization of acquisition-related intangible assets, offset by $5 million of net recoveries related to the cyber ransomware incident. Gross margin for the six months ended June 30, 2023 included $1 million of transformation and restructuring costs, $5 million of stock-based compensation expense, $21 million of amortization of acquisition-related intangible assets and $5 million of cyber ransomware incident recovery costs. Excluding these items, gross margin as a percentage of revenue decreased from 2023 to 2024 related to a decline in gross margin related to payments processing services due to the divestiture at the end of 2023.

### Selling, General and Administrative Expenses

*In millions*

|  | Three months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Selling, general and administrative expenses | **$140** | $167 | **16.0%** | 17.7% | (16)% |

#### For the three months ended June 30, 2024 compared to the three months ended June 30, 2023

Selling, general, and administrative expenses were $140 million in the three months ended June 30, 2024, compared to $167 million in the three months ended June 30, 2023. As a percentage of revenue, selling, general and administrative expenses were 16.0% in the three months ended June 30, 2024 compared to 17.7% in the same period of 2023. In the three months ended June 30, 2024, selling, general and administrative expenses included $15 million of transformation and restructuring costs, $13 million of strategic initiative costs, $6 million of stock-based compensation expense, $10 million of amortization of acquisition-related intangible assets, $3 million of separation-related costs, and $1 million of cyber ransomware incident recovery costs, offset by $1 million in net recoveries related to the ACH fraud disbursements matter. In the three months ended June 30, 2023, selling, general and administrative expenses included $8 million of transformation and restructuring costs, $3 million of fraudulent ACH disbursement costs, $21 million of stock-based compensation expense, $7 million of amortization of acquisition-related intangible assets, $1 million of acquisition-related costs, $6 million of separation-related costs and $6 million of cyber ransomware incident recovery costs. Excluding these items, selling, general and administrative expenses decreased as a percentage of revenue from 2023 to 2024 due to cost mitigation actions implemented in the three months ended June 30, 2024.

*In millions*

|  | Six months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 vs 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Selling, general and administrative expenses | **$271** | $322 | **15.6%** | 17.4% | (16)% |

44

#### For the six months ended June 30, 2024 compared to the six months ended June 30, 2023

Selling, general, and administrative expenses were $271 million compared to $322 million in the six months ended June 30, 2024 and 2023, respectively. As a percentage of revenue, selling, general and administrative expenses were 15.6% and 17.4% in the six months ended June 30, 2024 and 2023, respectively. In the six months ended June 30, 2024, selling, general and administrative expenses included $29 million of transformation and restructuring costs, $17 million of strategic initiative costs, $13 million of stock-based compensation expense, $20 million of amortization of acquisition-related intangible assets $4 million of separation-related costs, and $1 million of cyber ransomware incident recovery costs, offset by $2 million in net recoveries related to the ACH fraud disbursements matter. In the six months ended June 30, 2023, selling, general and administrative expenses included $11 million of transformation and restructuring costs, $5 million of fraudulent ACH disbursement costs, $41 million of stock-based compensation expense, $14 million of amortization of acquisition-related intangible assets, $1 million of acquisition-related costs, $8 million of separation-related costs and $6 million of cyber ransomware incident recovery costs. Excluding these items, selling, general and administrative expenses decreased as a percentage of revenue from 2023 to 2024 due to cost mitigation actions implemented in the six months ended June 30, 2024.

### Research and Development Expenses

*In millions*

|  | Three months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Research and development expenses | **$55** | $42 | **6.3%** | 4.4% | 31% |

#### For the three months ended June 30, 2024 compared to the three months ended June 30, 2023

Research and development expenses were $55 million in the three months ended June 30, 2024, compared to $42 million in the three months ended June 30, 2023. As a percentage of revenue, research and development costs were 6.3% and 4.4% in the three months ended June 30, 2024 and 2023, respectively. In the three months ended June 30, 2024, research and development costs included $2 million of transformation and restructuring costs and $4 million of stock-based compensation expense. In the three months ended June 30, 2023, research and development expenses included $2 million of stock-based compensation expense. Excluding these items, research and development expenses increased as a percentage of revenue from 2023 to 2024 as the Company continues investing in research and development activities.

*In millions*

|  | Six months ended June 30 2024 | 2023 | Percentage of Total Revenue 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Research and development expenses | **$115** | $91 | **6.6%** | 4.9% | 26% |

#### For the six months ended June 30, 2024 compared to the six months ended June 30, 2023

Research and development expenses were $115 million compared to $91 million in the six months ended June 30, 2024 and 2023, respectively. As a percentage of revenue, these costs were 6.6% and 4.9% in the six months ended June 30, 2024 and 2023, respectively. In the six months ended June 30, 2024, research and development expenses included included $4 million of transformation and restructuring costs, $7 million of stock-based compensation expense and $4 million of separation-related costs. In the six months ended June 30, 2023, research and development expenses included $4 million of stock-based compensation expense. After considering these items, research and development expenses increased as a percentage of revenue from 2023 to 2024 as the Company continues investing in research and development activities.

### Interest Expense

*In millions*

|  | Three months ended June 30 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: |
| Interest expense | **$41** | $91 | (55)% |

#### For the three months ended June 30, 2024 compared to the three months ended June 30, 2023

Interest expense was $41 million compared to $91 million for the three months ended June 30, 2024 and 2023, respectively. Interest expense is primarily related to our senior unsecured notes and borrowings under the Senior Secured Credit Facility. The decrease in interest expense was due to the decrease in total debt outstanding.

*In millions*

|  | Six months ended June 30 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: |
| Interest expense | **$80** | $174 | (54)% |

#### For the six months ended June 30, 2024 compared to the six months ended June 30, 2023

Interest expense was $80 million compared to $174 million for the six months ended June 30, 2024 and 2023, respectively. Interest expense is primarily related to our senior unsecured notes and borrowings under the Senior Secured Credit Facility. The decrease in interest expense was due to the decrease in total debt outstanding.

### Other Income (Expense), net

Other income (expense), net was expense of $5 million and $8 million for the three months ended June 30, 2024 and 2023, respectively, and expense of $25 million and $12 million for the six months ended June 30, 2024 and 2023, respectively, with the components reflected in the following table:

*In millions*

|  | Three months ended June 30 2024 | 2023 | Six months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Interest income | **$1** | $3 | **$3** | $6 |
| Foreign currency fluctuations and foreign exchange contracts | **—** | (9) | **(22)** | (9) |
| Bank-related fees | **(6)** | (8) | **(14)** | (13) |
| Employee benefit plans | **(1)** | (1) | **(2)** | (2) |
| Other, net | **1** | 7 | **10** | 6 |
| **Other income (expense), net** | **$(5)** | $(8) | **$(25)** | $(12) |

Foreign currency fluctuations and foreign exchange contracts within Other income (expense), net, includes a net loss of $15 million due to the impact of changes in the Lebanese pound and the Egyptian pound during the six months ended June 30, 2024. As of March 31, 2024, the operations of Lebanon and Egypt have transferred to NCR Atleos; however, we retained certain assets and liabilities under the separation and disclosure agreement which were impacted by the changes in foreign currency fluctuations.

### Income Taxes

*In millions*

|  | Three months ended June 30 2024 | 2023 | Six months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Income tax expense (benefit) | **$24** | $7 | **$10** | $12 |

#### For the three months ended June 30, 2024 compared to the three months ended June 30, 2023

Income tax provisions for interim (quarterly) periods are based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual items. Income tax expense from continuing operations was $24 million for the three months ended June 30, 2024 compared to income tax expense of $7 million for the three months ended June 30, 2023. The change was primarily driven by an unfavorable mix of earnings between our US and non-US jurisdictions in the three months ended June 30, 2024 compared to the prior year. Additionally, the Company recognized higher discrete tax expenses in the three months ended June 30, 2024.

#### For the six months ended June 30, 2024 compared to the six months ended June 30, 2023

Income tax expense was $10 million for the six months ended June 30, 2024 compared to income tax expense of $12 million for the six months ended June 30, 2023. The change in tax expense was impacted by the mix of earnings between our US and non-US jurisdictions.

The Company is subject to numerous federal, state and foreign tax audits. While we believe that appropriate reserves exist for issues that might arise from these audits, should these audits be settled, the resulting tax effect could impact the tax provision and cash flows in 2024 or future periods.

### Income (Loss) from Discontinued Operations

The Company recognized income from discontinued operations, net of tax, of $1 million for the three months ended June 30, 2024 related to NCR Atleos. The Company did not recognize a gain or loss from discontinued operations, net of tax, during the six months ended June 30, 2024.

The Company recognized income from discontinued operations, net of tax, of $147 million for the six months ended June 30, 2023, of which $148 million related to income from discontinued operations, net of tax, for NCR Atleos and $1 million of expense from discontinued operations, net of tax, related to the Company’s environmental remediation matters.

The Company recognized income from discontinued operations, net of tax, of $67 million for the three months ended June 30, 2023, of which $68 million related to income from discontinued operations, net of tax, for NCR Atleos and $1 million of expense from discontinued operations, net of tax, related to the Company’s environmental remediation matters.

Refer to Note 2, “Discontinued Operations” of the Notes to Condensed Consolidated Financial Statements, for additional information.

### Revenue and Adjusted EBITDA by Segment

The Company manages and reports its businesses in the following segments: Retail, Restaurants (formerly reported as Hospitality), and Digital Banking. Segments are measured for profitability by the Company’s chief operating decision maker based on revenue and segment Adjusted EBITDA. Refer to the section above entitled “Non-GAAP Financial Measures and Use of Certain Terms” for our definition of Adjusted EBITDA and the reconciliation of net income (loss) from continuing operations attributable to NCR Voyix (GAAP) to Adjusted EBITDA (non-GAAP).

Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to any of our three individual reportable segments along with certain non-strategic businesses that are considered immaterial operating segment(s), certain countries which are expected to transfer to NCR Atleos during the remainder of 2024, and commercial agreements with NCR Atleos.

The following tables show our segment revenue and Adjusted EBITDA for the three and six months ended June 30, the relative percentage that those amounts represent to segment revenue, and the change in those amounts year-over-year.

*In millions*

| Revenue | Three months ended June 30 2024 | 2023 | Percentage of Revenue (1) 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Retail | **$517** | $553 | **59.0%** | 58.5% | (7)% |
| Restaurants | **201** | 223 | **22.9%** | 23.6% | (10)% |
| Digital Banking | **154** | 141 | **17.6%** | 14.9% | 9% |
| **Total segment revenue** | **$872** | $917 | **99.5%** | 97.0% | (5)% |
| Other | **4** | 29 | **0.5%** | 3.0% | (86)% |
| **Total revenue** | **$876** | $946 | **100.0%** | 100.0% | (7)% |
| **Adjusted EBITDA by Segment** |  |  |  |  |  |
| Retail | **$87** | $115 | **16.8%** | 20.8% | (24)% |
| Restaurants | **62** | 51 | **30.8%** | 22.9% | 22% |
| Digital Banking | **63** | 54 | **40.9%** | 38.3% | 17% |

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for Adjusted EBITDA, which are divided by the related component of revenue.

*In millions*

| Revenue | Six months ended June 30 2024 | 2023 | Percentage of Revenue (1) 2024 | 2023 | Increase (Decrease) 2024 v 2023 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Retail | **$1,008** | $1,081 | **58.1%** | 58.4% | (7)% |
| Restaurants | **403** | 434 | **23.2%** | 23.4% | (7)% |
| Digital Banking | **301** | 278 | **17.4%** | 15.0% | 8% |
| **Total segment revenue** | **$1,712** | $1,793 | **98.7%** | 96.8% | (5)% |
| Other | **22** | 59 | **1.3%** | 3.2% | (63)% |
| **Total revenue** | **$1,734** | $1,852 | **100.0%** | 100.0% | (6)% |
| **Adjusted EBITDA by Segment** |  |  |  |  |  |
| Retail | **$173** | $198 | **17.2%** | 18.3% | (13)% |
| Restaurants | **117** | 95 | **29.0%** | 21.9% | 23% |
| Digital Banking | **117** | 103 | **38.9%** | 37.1% | 14% |

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for Adjusted EBITDA, which are divided by the related component of revenue.

### Segment Revenue

#### For the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023

Retail revenue decreased 7% for both the three and six months ended June 30, 2024, respectively, compared to the prior year periods. For the three months ended June 30, 2024, the decrease in revenue is due to a decrease in hardware revenue, as well as a decrease in one-time software and services revenue as compared to the prior year period. For the six months ended June 30, 2024, the decrease in revenue is due to a decrease in hardware revenue, as well as a decrease in one-time services revenue, primarily transaction services revenue, partially offset by an increase in software-related revenue.

Restaurants revenue decreased 10% and 7% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods. For the three and six months ended June 30, 2024, the decrease in revenue is due to a decrease in hardware revenue, offset by an increase in software-related revenue, primarily payment processing services revenues.

Digital Banking revenue increased 9% and 8% for the three and six months ended June 30, 2024, compared to the prior year periods, due to an increase in recurring cloud services revenue, software maintenance revenue and software license revenue.

### Segment Adjusted EBITDA

#### For the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023

Retail Adjusted EBITDA decreased 24% and 13% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods. The decrease in Adjusted EBITDA for both periods is due to one-time software and services revenue recognized in the prior year.

Restaurants Adjusted EBITDA increased 22% and 23% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods. This increase is due to favorable software and services revenue mix, along with cost mitigation actions around cost of goods and service delivery costs taken during the year.

Digital Banking Adjusted EBITDA increased 17% and 14% for the three and six months ended June 30, 2024, respectively, compared to the prior year periods due to the revenue growth described above.

#### Financial Condition, Liquidity, and Capital Resources

Our primary liquidity needs in the ordinary course of business are to: (i) fund normal operating expenses; (ii) meet the interest and principal requirements of our outstanding indebtedness, including finance leases; (iii) fund capital expenditures and operating lease payments; (iv) remediation payments related to environmental matters; (v) meet our expected pension and postemployment plan contributions; and (vi) payments related to transformation and restructuring initiatives. We believe these needs will be satisfied in both the short and long term based on our current cash position, cash flows generated by our operations, and existing financing arrangements.

Upon the closing of the Digital Banking Sale, the Company expects to use the net proceeds primarily to reduce debt, including outstanding amounts under the term loan facility and Revolving Credit Facility, repurchases of certain senior unsecured notes, and termination of the trade receivables facility.

As of June 30, 2024, our cash and cash equivalents totaled $204 million and our total debt was $2.6 billion. Our borrowing capacity under our senior secured credit facility was $342 million as of June 30, 2024. Our ability to generate positive cash flows from operations is dependent on general economic conditions, and the competitive environment in our industry, and is subject to business and other risk factors, including as detailed in our filings with the SEC. If we are unable to generate sufficient cash flows from operations, or otherwise comply with the terms of our credit facilities, we may be required to seek additional financing alternatives.

The following table summarizes our cash flows from operating activities, investing activities and financing activities for the six months ended June 30, 2024 and 2023:

*In millions*

|  | Six months ended June 30 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | **$27** | $538 |
| Net cash provided by (used in) investing activities | **(81)** | (194) |
| Net cash provided by (used in) financing activities | **15** | (266) |

The following table summarizes information related to cash flows from discontinued operations related to the Spin-Off of NCR Atleos:

*In millions*

| 2024(1) | Six months ended June 30 2023 |  |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $— | $292 |
| Net cash provided by (used in) investing activities | — | (37) |
| Net cash provided by (used in) financing activities | — | (2) |

(1) Represents operations of NCR Atleos through date of separation versus full quarter of NCR Atleos operations for 2023.

Net cash provided by or used in operating activities of discontinued operations related to environmental obligations was cash provided by operating activities of $3 million and cash used in operating activities $6 million for the six months ended June 30, 2024 and 2023, respectively.

*Operating Activities* Cash provided by operating activities was $27 million in the six months ended June 30, 2024 compared to cash provided by operating activities of $538 million in the six months ended June 30, 2023. The decrease in cash provided by operating activities was driven by the net loss in the six months ended June 30, 2024 and movement in the net working capital accounts, as well as employee related payments in 2024.

*Capital Expenditures and Other Investing Activities* Our principal capital expenditures are for software (purchased and internally developed) and additions to property and equipment. We invested approximately $125 million and $204 million in capital expenditures during the six months ended June 30, 2024 and 2023, respectively. We expect to continue investing in property and equipment, purchased software and internally developed software to support our business. During the six months ended June 30, 2024, the Company disposed of certain corporate-owned life insurance policies and received proceeds of $30 million.

*Financing Activities* Financing activities mainly related to borrowings and repayments under our senior secured credit facilities as well as our unsecured senior notes. Financing activities also included dividends paid on the Series A preferred stock, proceeds from employee stock plans as well as tax withholding payments on behalf of employees for stock based awards that vested.

*Adjusted free cash flow* NCR Voyix management uses a non-GAAP measure called “adjusted free cash flow-unrestricted” to assess the financial performance of the Company. We define adjusted free cash flow as net cash provided by (used in) operating activities less capital expenditures for property, plant and equipment, less additions to capitalized software, plus/minus net reductions or reinvestments in the trade receivables facility due to fluctuations in the outstanding balance of receivables sold, restricted cash settlement activity, NCR Atleos settlement activity, net cash provided by (used in) environmental discontinued operations plus acquisition-related items, and plus pension contributions and settlements. NCR Atleos settlement activity relates to changes in amounts owed to and amounts due from NCR Atleos for activity related to items governed by the separation and distribution agreement. Activity from the commercial and transition services agreements are not included in this adjustment.

We believe adjusted free cash flow-unrestricted information is useful for investors because it relates the operating cash flows from the Company’s continuing and discontinued operations to the capital that is spent to continue and improve business operations. In particular, adjusted free cash flow indicates the amount of cash available after capital expenditures for, among other things, investments in the Company’s existing businesses, strategic acquisitions, and repayment of debt obligations. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures, since there may be other non-discretionary expenditures that are not deducted from the measure. Adjusted free cash flow does not have a uniform definition under GAAP, and therefore the Company’s definition may differ from other companies’ definitions of this measure. This non-GAAP measure should not be considered a substitute for, or superior to, cash flows from operating activities under GAAP.

The table below reconciles net cash provided by operating activities to NCR Voyix’s non-GAAP measure of adjusted free cash flow-unrestricted for the six months ended June 30, 2024:

*In millions*

|  | Six months ended June 30, 2024(1) |
| --- | ---: |
| Net cash provided by (used in) operating activities (GAAP) | **$27** |
| Expenditures for property, plant and equipment | **(21)** |
| Additions to capitalized software | **(104)** |
| Restricted cash settlement activity | **3** |
| NCR Atleos settlement activity | **(5)** |
| Pension contributions | **5** |
| Change in trade receivables facility | **—** |
| Net cash provided by (used in) environmental discontinued operations | **3** |
| Adjusted free cash flow-unrestricted (non-GAAP) | **$(92)** |

(1) Adjusted free cash flow-unrestricted for the six months ended June 30, 2023 is not meaningful for comparison purposes given the presentation of cash flows due to the Spin-Off of NCR Atleos.

**Long Term Borrowings** The senior secured credit facilities include a term loan facility in an initial aggregate principal amount of $200 million, of which $192 million was outstanding as of June 30, 2024. Additionally, the senior secured credit facilities include a five-year Revolving Credit Facility with an aggregate principal amount of $500 million, of which $136 million was outstanding as of June 30, 2024. The Revolving Credit Facility also contains a sub-facility to be used for letters of credit, and as of June 30, 2024, there were $22 million letters of credit outstanding.

As of June 30, 2024, we had outstanding $1.2 billion in aggregate principal balance of 5.125% senior unsecured notes due in 2029, $650 million aggregate principal balance of 5.000% senior unsecured notes due in 2028 and $450 million in aggregate principal balance of 5.250% senior unsecured notes due in 2030.

Refer to Note 5, “Debt Obligations”, of the Notes to Condensed Consolidated Financial Statements, for additional information regarding debt transactions.

**Employee Benefit Plans** In 2024, we expect to make contributions of $13 million to our international pension plans and $51 million to our postemployment plan. For additional information, refer to Note 9, “Employee Benefit Plans”, of the Notes to Condensed Consolidated Financial Statements.

**Series A Convertible Preferred Stock** As of June 30, 2024, the redemption value of the Series A Preferred Stock was approximately $276 million. Holders of Series A Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per annum, payable quarterly in arrears. Beginning in the first quarter of 2020, dividends are payable in cash or in-kind at the option of the Company. During the six months ended June 30, 2024 and 2023, the Company paid cash dividends of $8 million.

Prior to the close of business on October 17, 2023, the Series A Convertible Preferred Stock was convertible at the option of the holders at any time into shares of common stock at a conversion price of $30.00 per share, or a conversion rate of 33.333 shares of common stock per share of Series A Convertible Preferred Stock. As a result of the Spin-Off, the conversion rate of the Series A Convertible Preferred Stock was adjusted pursuant to its terms to 57.5601 shares of common stock per share of Series A Convertible Preferred Stock, effective immediately after the close of business on October 17, 2023. As of June 30, 2024, the maximum number of common shares that could be required to be issued upon conversion of the outstanding shares of the Series A Convertible Preferred Stock was 15.9 million shares, which would represent approximately 10% of our outstanding common stock as of June 30, 2024, including the preferred shares on an as-converted basis.

**Cash and Cash Equivalents Held by Foreign Subsidiaries** Cash and cash equivalents held by the Company’s foreign subsidiaries at June 30, 2024 and December 31, 2023 were $155 million and $190 million, respectively. Under current tax laws and regulations, if cash and cash equivalents and short-term investments held outside the U.S. are distributed to the U.S. in the form of dividends or otherwise, we may be subject to additional U.S. income taxes and foreign withholding taxes, which could be significant.

**Summary** As of June 30, 2024, our cash and cash equivalents totaled $204 million and our total debt was $2.63 billion, excluding deferred fees. As of June 30, 2024, our borrowing capacity under the Revolving Credit Facility was approximately $342 million. Our ability to generate positive cash flows from operations is dependent on general economic conditions, the competitive environment in our industry, and is subject to the business and other risk factors described in Item 1A of Part I of the Company’s 2023 Annual Report on Form 10-K and Item 1A of Part II of this Quarterly Report on Form 10-Q (as applicable). If we are unable to generate sufficient cash flows from operations, or otherwise comply with the terms of our credit facilities, we may be required to seek additional financing alternatives.

We believe that we have sufficient liquidity based on our current cash position and existing financing to meet our expected pension, postemployment, and postretirement plan contributions, remediation payments related to environmental matters, debt servicing obligations, payments related to separation, transformation and restructuring initiatives, and in the long-term (i.e., beyond June 30, 2024) to meet our material cash requirements.

#### Material Cash Requirements from Contractual and Other Obligations

There have been no significant changes in our contractual and other commercial obligations as described in our Form 10-K for the year ended December 31, 2023.

#### Critical Accounting Policies and Estimates

Critical accounting policies are those that are most important to the portrayal of our financial position and results of operations. These policies require highly subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting estimates pertain to revenue recognition, inventory valuation, goodwill and intangible assets, pension, postretirement and postemployment benefits, environmental and legal contingencies, and income taxes, which are described in Item 7. of our 2023 Form 10-K.

#### New Accounting Pronouncements

See discussion in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”, of the Notes to Condensed Consolidated Financial Statements for new accounting pronouncements.

#### Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements use words such as “expect,” “anticipate,” “outlook,” “intend,” “plan,” “confident,” “believe,” “will,” “should,” “would,” “potential,” “positioning,” “proposed,” “planned,” “objective,” “likely,” “could,” “may,” and words of similar meaning, as well as other words or expressions referencing future events, conditions or circumstances. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Act. Statements that describe or relate to the Company’s plans, goals, intentions, strategies, or financial outlook, and statements that do not relate to historical or current fact, are examples of forward-looking statements. Examples of forward-looking statements in this Quarterly Report include, without limitation, statements regarding: the Company’s plans, strategies or objectives for future operations; expectations regarding the Digital Banking Sale, including the expected use of proceeds from the sale and the timing of the expected completion of the transaction; expectations regarding the Hardware Business Transition and additional cost alignment initiatives; the estimated or anticipated future results and benefits of the Company’s plans and operations; the Company’s expectations of demand for its solutions and the impact thereof on the Company's financial results in 2024; the Company’s ability to deliver increased value to customers and stockholders; statements regarding the spin-off of NCR Atleos; and the Company’s ability to offset losses incurred from fraudulent ACH disbursements from a Company bank account identified in February 2024 through insurance proceeds. Forward-looking statements are based on our current beliefs, expectations and assumptions, which may not prove to be accurate, and involve a number of known and unknown risks and uncertainties, many of which are out of the Company’s control. Forward-looking statements are not guarantees of future performance, and there are a number of important factors that could cause actual outcomes and results to differ materially from the results contemplated by such forward-looking statements, including those factors relating to: challenges with transforming and growing our business; our ability to achieve the expected benefits of the Digital Banking Sale; our ability to consummate the Digital Banking Sale within the anticipated timeline, or at all; the impact of the Digital Banking Sale, including disruption to the Company's business caused by the pending sale or in connection with the provision of transition services following the closing of the sale; our ability to realize the anticipated cost savings and other benefits related to the Hardware Business Transition and other challenges associated with the Hardware Business Transition; our ability to attract new customers, increase use of our platform by existing customers and cross-sell additional products and solutions; development and introduction of new, competitive solutions on a timely, cost-effective basis; our ability to compete effectively against new and existing competitors; our ability to maintain a consistently high level of customer service; our ability to successfully manage our profitability and cost reduction initiatives; integration of acquisitions and management of other strategic transactions; the potential strategic benefits, synergies or opportunities expected from the Spin-Off may not be realized or may take longer to realize than expected; any unforeseen tax liabilities or impacts resulting from the Spin-Off, requests, requirements or penalties imposed by any governmental authorities related to certain existing liabilities; domestic and global economic and credit conditions; downturn or consolidation in the financial services industry; difficulties and risks associated with developing and selling complex new solutions and enhancements, including those using artificial intelligence; risks and uncertainties associated with our payments-related business; disruptions in our data center hosting and public cloud facilities; any failures or delays in our efforts to modernize our information technology infrastructure; retention and attraction of key employees; defects, errors, installation difficulties or development delays; failure of third-party suppliers; a major natural disaster or catastrophic event; geopolitical and macroeconomic challenges or events or acts of terrorism; environmental exposures from historical manufacturing activities; the impact of cybersecurity incidents on our business, including the April 2023 ransomware incident, and efforts to prevent or mitigate such incidents and any related impacts on our operations; efforts to comply with applicable data protection and data privacy laws; our level of indebtedness; the terms governing our indebtedness; incurrence of additional debt or other liabilities or obligations; access to the capital markets and other sources of financing; our cash flow sufficiency to service our indebtedness; interest rate risks and increased costs of borrowings; the terms governing our trade receivables facility; the impact of certain changes in control relating to acceleration of our indebtedness; our obligations under other financing arrangements, or required repurchase of our senior unsecured notes; any lowering or withdrawal of the ratings assigned to our debt securities by rating agencies; unforeseen tax liabilities or changes in tax law; our failure to maintain effective internal control over financial reporting and disclosure controls and procedures and our ability to remediate material weaknesses in our internal control over financial reporting; the write down of the value of certain significant assets; allegations or claims by third parties that our products or services infringe on intellectual property rights of others, including claims against our customers and claims by our customers to defend and indemnify them with respect to such claims; protection of our intellectual property; changes to our tax rates and additional income tax liabilities; and uncertainties regarding regulations, lawsuits and other related matters; rights preferences and privileges of holders of our Series A Convertible Stock compared to the rights of our common stockholders; impact of the terms of our Series A Convertible Preferred Stock relating to voting power, share dilution and market price of our common stock; actions or proposals from stockholders that do not align with our business strategies or the interest of our stockholders; and other factors presented in “Item 1A-Risk Factors” of our most recent Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent filings we make with the U.S. Securities and Exchange Commission (“SEC”), which we advise you to review.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and should not be relied upon as representing our plans and expectations as of any subsequent date. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

## Market risk

As filed, 6,670 characters.

#### Market Risk

We are exposed to market risks primarily from changes in foreign currency exchange rates and interest rates. It is our policy to manage our foreign exchange exposure and debt structure in order to manage capital costs, control financial risks and maintain financial flexibility over the long term. In managing market risks, we employ derivatives according to documented policies and procedures, including foreign currency contracts and interest rate swaps. We do not use derivatives for trading or speculative purposes.

#### Foreign Exchange Risk

Since a substantial portion of our operations and revenue occur outside the United States, and in currencies other than the U.S. Dollar, our results can be significantly impacted by changes in foreign currency exchange rates. We have exposure to approximately 30 functional currencies and are exposed to foreign currency exchange risk with respect to our sales, profits and assets and liabilities denominated in currencies other than the U.S. Dollar. Although we use financial instruments to hedge certain foreign currency risks, we are not fully protected against foreign currency fluctuations and our reported results of operations could be affected by changes in foreign currency exchange rates. To manage our exposures and mitigate the impact of currency fluctuations on the operations of our foreign subsidiaries, we hedge our main transactional exposures through the use of foreign exchange forward and option contracts. This is primarily done through the hedging of foreign currency denominated inter-company inventory purchases by the marketing units and the foreign currency denominated inputs to our manufacturing units. All of these transactions are forecasted. If these contracts are designated as highly effective cash flow hedges, the gains or losses are deferred into accumulated other comprehensive income (“AOCI”). The gains or losses from derivative contracts that are designated as highly effective cash flow hedges related to inventory purchases are recorded in cost of products when the inventory is sold to an unrelated third party. Otherwise, the gains or losses from these contracts are recognized in earnings as exchange rates change. We also use derivatives not designated as hedging instruments consisting primarily of forward contracts to hedge foreign currency denominated balance sheet exposures. For these derivatives we recognize gains and losses in the same period as the remeasurement losses and gains of the related foreign currency-denominated exposures.

We utilize non-exchange traded financial instruments, such as foreign exchange forward and option contracts, that we purchase exclusively from highly rated financial institutions. We record these contracts on our balance sheet at fair market value based upon market price quotations from the financial institutions. We do not enter into non-exchange traded contracts that require the use of fair value estimation techniques, but if we did, they could have a material impact on our financial results.

For purposes of analyzing potential risk, we use sensitivity analysis to quantify potential impacts that market rate changes may have on the fair values of our hedge portfolio related to firmly committed or forecasted transactions. The sensitivity analysis represents the hypothetical changes in value of the hedge position and does not reflect the related gain or loss on the forecasted underlying transaction. A 10% appreciation in the value of the U.S. Dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding decrease in the fair value of the hedge portfolio of $17 million as of June 30, 2024. A 10% depreciation in the value of the U.S. Dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding increase in the fair value of the hedge portfolio of $18 million as of June 30, 2024. The Company expects that any increase or decrease in the fair value of the portfolio would be substantially offset by increases or decreases in the underlying exposures being hedged.

The U.S. Dollar was stronger in the second quarter of 2024 compared to the second quarter of 2023 based on comparable weighted averages for our functional currencies. This excludes the effects of our hedging activities and, therefore, does not reflect the actual impact of fluctuations in exchange rates on our operating income.

#### Interest Rate Risk

We are subject to interest rate risk principally in relation to variable-rate debt. Approximately 88% of our borrowings were on a fixed rate basis as of June 30, 2024. The increase in pre-tax interest expense for the six months ended June 30, 2024 from a hypothetical 100 basis point increase in variable interest rates would be approximately $2 million. As of June 30, 2024, we do not have any outstanding interest rate derivative contracts related to our variable rate debt.

We historically utilized interest rate swap contracts and interest rate cap agreements to add stability to interest expense and to manage exposure to interest rate movements as part of our interest rate risk management strategy. Payments and receipts related to interest rate cap agreements and interest rate swap contracts are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Refer to Note 13, “Derivatives and Hedging Instruments”, for further information on our interest rate derivative contracts.

#### Concentrations of Credit Risk

We are potentially subject to concentrations of credit risk on accounts receivable and financial instruments, such as hedging instruments and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the balance sheet. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions as counterparties to hedging transactions, and monitoring procedures. Our business often involves large transactions with customers for which we do not require collateral. If one or more of those customers were to default in its obligations under applicable contractual arrangements, we could be exposed to potentially significant losses. Moreover, a prolonged downturn in the global economy could have an adverse impact on the ability of our customers to pay their obligations on a timely basis. We believe that the reserves for potential losses are adequate. As of June 30, 2024, we did not have any significant concentration of credit risk related to financial instruments.

## Controls and procedures

As filed, 5,578 characters.

#### Evaluation of Disclosure Controls and Procedures

The Company has established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). The Company’s management carried out an evaluation, under the supervision and with the participation of its Chief Executive and Chief Financial Officers, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2024. Based on this evaluation, the Company’s Chief Executive and Chief Financial Officers have concluded that, due to the material weaknesses in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of June 30, 2024 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive and Chief Financial Officers, as appropriate to allow timely decisions regarding required disclosure.

#### Previously Reported Material Weaknesses

As previously reported in Part II, Item 9A, “Controls and Procedures” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, management identified the following material weaknesses in the Company’s internal control over financial reporting as of December 31, 2023:

- The Company did not design and maintain effective controls to prevent or timely detect unauthorized Automated Clearing House (“ACH”) disbursements; and
- The Company did not design and maintain effective controls related to accounts receivable and accounts payable clearing accounts. Specifically, controls were not designed at a sufficient level of precision to timely reconcile and review the reasonableness and supportability of clearing account balances, including review of the nature and aging of the individual clearing account balances.

Although not materially impacting any previously reported periods, these material weaknesses resulted in errors in the Company’s historical 2022 and 2021 financial statements and the revision of interim periods in 2023. Additionally, these material weaknesses could result in material misstatements to the Company’s consolidated financial statements that would not be prevented or detected.

#### Status of Remediation Plans and Actions

The Company has implemented measures designed to ensure that the control deficiencies contributing to the material weaknesses described above are remediated. While we have implemented the remedial measures described below, we are still in the process of testing the applicable remediated controls. Accordingly, the material weaknesses have not yet been fully remediated as of June 30, 2024. The remediation actions implemented to date are as follows:

- We have implemented a monitoring control to (i) perform at least an annual review of all Company bank account attributes and (ii) regularly review bank account activity for large and/or unusual transactions for all bank accounts permitting ACH direct debit transactions.
- We have implemented a monthly control, with a sufficient level of precision, to timely reconcile and review the reasonableness and supportability of accounts receivable and accounts payable clearing account balances, including a review of the nature and aging of the individual clearing account balances.
- We have implemented enhanced review controls specific to accounts receivable and accounts payable clearing accounts to ensure clear and precise escalation protocols for unreconciled items and the timely resolution of any matters escalated.
- We have supplemented our existing training materials regarding fraud prevention and detection and incident escalation and resolution procedures.

As the Company continues to evaluate and work to improve its internal control over financial reporting, the Company may decide to take additional measures or modify the remediation plans described above. The Company believes that these actions taken will remediate the material weaknesses described above; however, the material weaknesses are not considered remediated until those controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. The Company will continue to monitor the design and effectiveness of these and other processes, procedures and controls and make any further changes management deems appropriate.

To address the material weaknesses referenced above, management has performed additional analyses and procedures in order to prepare the consolidated financial statements included in Item 1 of this Quarterly Report. Based on these analyses and procedures, management believes that the consolidated financial statements included in this Quarterly Report present, in all material respects, the Company’s financial condition, results of operations and cash flows at and for the periods presented.

#### Changes in Internal Control over Financial Reporting

Other than the remediation efforts described above, there have been no changes in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 7,542 characters.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under Part I, Item 1A. “Risk Factors” in the Company’s 2023 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or future results. Other than the risk factors below, there have been no material changes in our risk factors from those described in the 2023 Annual Report on Form 10-K.

***The proposed sale of our Digital Banking business may not achieve some or all of the expected benefits and may adversely affect our business.***

On August 6, 2024, the Company entered into a definitive agreement with an affiliate of The Veritas Capital Fund VIII, L.P. (the “Buyer”) pursuant to which the Buyer agreed to purchase the Company’s Digital Banking segment businesses (the “Digital Banking Sale”). The Digital Banking Sale is expected to close by the end of fiscal year 2024, subject to receipt of necessary regulatory approvals and other customary closing conditions. We may not be able to achieve the full strategic, financial, operational, and other benefits that are expected to result from the Digital Banking Sale, including any expected optimization of operations, cost savings, and other business opportunities that may be facilitated by the Digital Banking Sale. In addition, such benefits may be delayed or less significant than anticipated. We cannot predict with certainty when the benefits expected from the Digital Banking Sale will occur or the extent to which they will be achieved, or when they will be achieved, if at all. A failure to realize these and other anticipated benefits of the Digital Banking Sale or effectively utilize the proceeds from the Digital Banking Sale could have an adverse impact our business, financial condition and results of operations. See also “Item 1A. Risk Factors—*Our acquisitions, divestitures and other strategic transactions may not produce anticipated results, which could have a material adverse effect on our business, financial condition or results of operations”* in our 2023 Annual Report on Form 10-K.

***The Company may be held liable to the Buyer if it fails to perform under its agreements with the Buyer, and the performance of such services may negatively affect the Company’s business and operations.***

In connection with the Digital Banking Sale, the Company and the Buyer will enter into certain agreements, including a transition services agreement, providing for the performance of certain services by the Company for the benefit of the Buyer for a period of time after the Digital Banking Sale. If the Company does not satisfactorily perform its obligations under these agreements, it may be held liable for certain losses incurred by the Buyer. In addition, during the transition services period, the Company’s management and employees may be required to divert their attention away from its business in order to provide services to the Buyer, which could adversely impact the Company’s business.

Further, as a result of these transition services, our counterparty will have access to certain of the Company’s information technology systems during the transition services period, as well as shared information technology infrastructure. Any disruption, degradation, destruction or manipulation of the Company’s information technology systems as a result of such access following the Digital Banking Sale, whether accidental or intentional, may cause cybersecurity, data protection or privacy incidents or failures, which could in turn interrupt or adversely impact our operations.

***Our inability to successfully complete the Digital Banking Sale may have a material adverse impact on our business.***

The Digital Banking Sale is subject to customary closing conditions and regulatory approvals. If any condition to the closing of the Digital Banking Sale is not satisfied or, if permissible, waived, or if we fail to obtain any necessary regulatory approval, the Digital Banking Sale may not be completed. In addition, satisfying the closing conditions to the Digital Banking Sale may occur on a longer or shorter timeframe than we expect. All of the conditions to closing may not satisfied or waived, and we may not successfully obtain requisite regulatory approvals. Further, other events may intervene to delay or result in a failure to consummate the Digital Banking Sale.

If the Digital Banking Sale is not completed for any reason, investor confidence could decline, and we would fail to receive the benefits of the transaction. In addition, we have expended, and continue to expend, significant resources in an effort to complete the Digital Banking Sale. Management’s attention may be diverted away from the day-to-day operations of our business and execution of our existing business plan in an effort to complete the Digital Banking Sale, which could disrupt operations and have an adverse effect on our operating results and business.

***We may not realize the anticipated cost savings or other benefits related to the transition of our Hardware Business to an outsourced design and manufacturing (ODM) model.***

On August 6, 2024, we announced our entry into a commercial agreement with Ennoconn Corp. (“Ennoconn”) to transition our point-of-sale and self-checkout hardware businesses to an outsourced design and manufacturing model (the “Hardware Business Transition”). The Hardware Business Transition is expected to be implemented starting in the first quarter of 2025. The Company anticipates that, once the Hardware Business Transition is implemented, it will record revenue from point-of-sale and self-checkout hardware sales on a net basis, excluding the costs paid to Ennoconn. Prior to the implementation of the Hardware Business Transition, the substantial majority of the revenues from our hardware business are attributable to point-of-sale and self-checkout hardware. Under our new business model following the Hardware Business Transition, a substantial majority of the revenue related to the sale of hardware will no longer be recognized by the Company, and will instead be recognized by the hardware provider. This will result in a substantial decrease to our hardware-related revenues and could have an adverse impact on our business and results of operations.

The Company also expects to reduce hardware-related costs in connection with the Hardware Business Transition. If the Company is unable to reduce costs in connection with the Hardware Business Transition or if the Hardware Business Transition has an adverse impact on the Company’s hardware sales or customer relationships, this could have a material adverse impact on our future operating results and financial condition.

In addition, as a result of the Hardware Business Transition, our counterparty will design, manufacture, warrant, supply, and ship self-checkout and point-of sale hardware directly to the Company’s customers. Third parties may fail to deliver on their commitments or otherwise breach obligations to our customers, which may in turn damage our reputation and relationship with our customers. As such, a failure of third parties to adequately serve our customers may materially adversely impact our results of operations and financial condition.

Filed Aug 6, 2024.
Source: SEC EDGAR, the filing index for accession 0000070866-24-000031. Last ingested by Listed: Nov 5, 2026, 11:37 ET. No prices; not investment advice.