VYX

Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2026 NCR Voyix Corporation earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Now, I would like to turn the call over to Sarah Jane Schneider, the Vice President of Investor Relations. Please go ahead.

Good morning, thank you for joining our 1st quarter 2026 earnings conference call. This morning, we issued our earnings release reporting financials for the quarter ending March 31st, 2026. A copy of the earnings release that we will reference during this call is available on the investor relations section of our website, which can be found at www.ncrvoyix.com and has been filed with the SEC. With me on the call today are Jim Kelly, our Chief Executive Officer, Nick East, our Chief Product Officer, Darren Wilson, President, Retail and Payments, Benny Tadele, President, Restaurants, and Brian Webb-Walsh, our Chief Financial Officer. This call is being recorded, and the webcast is available on the investor relations section of our website. Before we begin, please be advised that remarks today will contain forward-looking statements.

These forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. In addition, we will be discussing or providing certain non-GAAP financial measures today, which we believe will provide additional clarity regarding our ongoing performance.

For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release, furnished as an exhibit to our Form 8-K filed this morning and our supplemental materials available on the Investor Relations section of our website. With that, I would now like to turn the call over to Jim. Jim.

Good morning, thank you for joining the call, where we will provide updates on our first quarter performance and our strategic priorities. Both total revenue and software and services revenue were essentially flat, while adjusted EBITDA increased 5%, driven by early sales momentum from the Voyix Commerce Platform applications, coupled with the ongoing cost actions implemented in 2025. Reflective of the growing demand for our Voyix Commerce Platform solutions, this year we have conducted nearly 200 product demonstrations for new and existing retail and restaurant customers, including at NRF and other industry trade shows across key markets, including the U.K., Australia, Japan and Argentina. We have also upgraded our customer experience center in Atlanta to showcase our latest innovations, enabling both existing customers and prospects to experience their benefits across key verticals including grocery, convenience and fuel, restaurants, department store and specialty retail, and supply chain.

These demonstrations will soon be available virtually via our website. As I mentioned in my concluding remarks on our earnings call in February, we would begin sharing additional financial insights pertaining to the company's Voyix Commerce Platform application sales initiated in early 2025 and including Q1 2026. While these new software sales represent less than 5% of our roughly 400 enterprise customers globally, we are seeing initial momentum across the U.S. and Europe, as those were the first two regions where the new software applications were made available. Since its launch, the company has signed 21 new platform contracts through Q1 2026, with a remaining contract value for those customers of approximately $293 million, 13% of which relates to new customers.

We are very encouraged by this early success, coupled with the ongoing engagement across our broader installed base and prospective customers. Turning to our ODM, we implemented our agreement at the end of the first quarter and as of April first, now recognize only net commission revenue on hardware. Founded in 1885 as a hardware manufacturer, we had already outsourced all manufacturing, assembly and logistics by 2022, while continuing to carry inventory on our balance sheet. The Anycom transition, completed the end of March after more than 1 year of preparation, represented the final step in our evolution of becoming a software and services-led business, supported by payments and hardware sales. Finally, this March, we announced the sale of our Japan-based banking technology business for $32 million in sale proceeds. This business is now reflected in discontinued operations, with the transaction expected to be completed by year-end.

Inclusive of this divestiture, we generated nearly $2.5 billion in net proceeds since the spin-off of our ATM business. This includes the divestitures of our four non-core businesses between 2023 and 2026, and the anticipated working capital benefit from the ODM agreement. These sale proceeds enabled us to return capital to shareholders through common and preferred share repurchases, while also supporting debt reduction and targeted investments in our products and infrastructure. By year-end, we expect to have returned approximately 10% of the proceeds to shareholders post-spin. Building on our momentum, we continue strong customer validation of our Voyix Commerce Platform across both retail and restaurants, with growing adoption of our integrated software payments and services offering. These wins reinforce our ability to convert innovation into durable multi-year growth. Darren and Betty will provide additional detail on this momentum in their remarks.

With that, I will turn the call over to Nick.

Thanks, Jim. I'd like to begin by discussing the opportunities AI is creating for our business. On prior calls, we have discussed how we are using AI to accelerate the modernization of our global library of 40,000 unique retail and restaurant features into cloud-native applications on the Voyix Commerce Platform. Our ability to apply AI to migrate customers from legacy environments to an agile foundation for ongoing innovation is now translating into tangible commercial results. Recent customer wins, along with growth in remaining contract value for our BCP applications, reinforce strong long-term customer confidence in our solutions. We have also been embedding intelligence directly into the workflows our customers depend on, such as with Picklist Assist, our self-checkout solution, which uses camera vision to identify items, reduce shrink, and accelerate checkout.

Picklist Assist is now live in nearly 60,000 lanes across the globe, with consumer engagement and customer feedback exceeding our expectations. In two weeks, we'll be at the National Restaurant Association show in Chicago, showcasing Aloha Next, alongside a comprehensive portfolio of restaurant applications embedded within the BCP. For example, we will leverage computer vision and agentic restaurant operations to help restaurants increase sales and reduce waste. We will demonstrate menu pricing informed by competitive intelligence and real-time analytics powered by generative AI. Both of these solutions deliver actionable insights directly into restaurant workflows and day-to-day decision-making. Given the heightened focus on AI and its impact on technology valuations, I want to articulate four core attributes of our platform offering that we believe underpin the durability of our model before turning the call over to Darren.

First, our proper revenue model is fundamentally tied to customers' physical sites, devices, transaction volumes, and API usage. These are real-world operational drivers of value that are not being compressed by agentic AI. Second, NCR Voyix software operates at the center of a highly regulated environment with significant compliance requirements, including fiscal and tax, PCI, fuel, and weights and measures certifications. Our customers depend on us to maintain compliance as requirements evolve, and to deliver a clear technology path forward without disrupting their daily operations. This regulatory complexity reinforces the critical role we play in their businesses. As we continue to go to market with our BCP applications, we will attach payments as a core component of our end-to-end offering. Over time, this will enable us to both scale our payments business and further entrench our solutions within our customers' regulatory and operational workplace.

Third is the network effects created by third-party integrations into the Voyix Commerce Platform, connecting our platform into customers' enterprise solutions such as supply chain, loyalty, ordering, and accounting systems. Today, the BCP has more than 300 third-party integrations that power the daily operations of thousands of customers. As we continue to expand and open our APIs, agentic systems can more seamlessly integrate with the BCP, further increasing its value to customers and partners alike. Finally, data. As more transactions flow in from multiple channels, and as more lanes, devices, and third-party systems connect to the platform, its value compounds, driving better performance, deeper insights, and improved outcomes across our customer base. As an example, last month, for one customer alone, our platform processed around 115 million transactions and the related data of more than 900 million items sold.

As we move through the balance of the year, we are focused on building on our momentum, deepening customer engagement, scaling adoption of our embedded BCP applications, and converting our innovation roadmap into sustainable growth and long-term value creation. With that, I will turn the call over to Darren.

Thanks, Nick. Beginning with payments, our strategy is showing strong momentum. We're successfully updating our contracts for Voyix Connect, our proprietary gateway, to be tied to transaction volume with revenue building as we scale this initiative. Turning to retail. In the first quarter, our retail business signed nearly 70 new customers, primarily mid-market. Our platform and payment sites increased 6% and 13% respectively. Total recurring revenue increased 5%, with recurring software revenue increasing 8%. Market adoption of our enhanced platform offering continues to gain momentum, as reflected in strong customer engagement across the sales cycle, from initial demo through store rollout. Year to date, our product teams have delivered more than 130 demos to new and existing retail customers worldwide.

These engagements showcased our end-to-end portfolio as customers continue to shift away from individual products and towards integrated solutions spanning software, payments, and support services. We remain focused on the efficient deployment of our platform solutions to meet the needs of our enterprise customers. We recently completed our most significant deployment of Picklist Assist for a large enterprise retailer in the U.S. across more than 35,000 self-checkout lanes. For point-of-sale and self-checkout, we continue to advance deployments through a phased approach from lab testing to initial store launches and broad site deployment. Deployment velocity has already increased for two large grocers in the U.S. and Europe, and we look forward to continuing this momentum with additional customer rollouts. As announced in March, we signed a five-year agreement with Pilot, North America's largest travel center operator.

Under the expanded partnership, Pilot will deploy Voyix POS to C&FR together with additional related platform capabilities. The microservices-based architecture of the Voyix Commerce Platform will enable seamless delivery across Pilot's locations and support the activation of new capabilities, such as payments, further advancing Pilot's guest-centered strategy. We also signed a new platform contract with Stater Brothers, as announced earlier this week, a regional grocer with nearly 170 stores across Southern California, an existing NCR Voyix customer. Stater Brothers has chosen to adopt Voyix POS in an effort to support continued innovation for their business. With this win, we now have 22 signed contracts for our embedded VCP applications. Turning to services, this quarter, we continued to expand our services relationship with enterprise customers across the globe.

Beginning in the U.S., we signed a new three-year agreement with a large discount retailer to support their phased remodeling plan, which includes hardware installation and remote support. In Europe, we expanded our long-standing relationship with Lidl, a large German-based grocery chain, to both continue to provide installation services in Spain and now support their store openings in France. In Argentina, we secured a new services agreement with Carrefour, the largest retailer in the market, to provide help desk and hardware maintenance support. Finally, in Japan, we secured a multiyear contract with a leading department store and a new NCR Voyix customer to provide hardware installation services across their store footprint. With that, I turn the call over to Benny.

Thanks, Darren. In the first quarter, our restaurant business signed 100 new customers. Platform and payment size increased 9% and 1%, respectively. For enterprise and mid-market, recurring revenue increased 6% as recurring services revenue increased 13% and recurring software revenue was flat. Offsetting the performance of our mid-market and enterprise businesses was the continued softness in SMB. We expect this trend to begin to moderate with the launch of Aloha Next for SMB, our restaurant in-a-box solution, later this year. In 2026, we have continued to execute contract renewals across our enterprise customer base, including with Shipley Do-Nuts, California Pizza Kitchen, and Heywood, reinforcing the durability of our relationships. While these customers have renewed without our existing Aloha point-of-sale technology, they have expressed strong enthusiasm for Aloha Next with very positive feedback on its ability to maintain their same capabilities and interface.

As such, these renewal agreements include plans for the customers to begin engaging with Aloha Next in lab environments over the coming months, positioning them for implementation as it becomes broadly available. We are continuing to expand our enterprise restaurant business internationally. As I discussed on our third quarter call in November, we signed a multiyear agreement with Marco's Pizza, one of the fastest-growing pizza chains in the United States, to support its global expansion efforts. Following an initial rollout in Mexico, we have continued to win additional international Marco's Pizza locations, most recently signing their business in the Bahamas. Turning to our mid-market business, our ability to equip operators with enterprise-grade capabilities, including software, payments, and services, continues to differentiate NCR Voyix. As a partner that helps emerging brands scale, we believe our position will be further strengthened by the launch of Aloha Next.

For example, this quarter, we executed an agreement with Gyro Hut, a Mediterranean fast-casual brand with locations in Texas, to provide point-of-sale and add-on capabilities such as kitchen display systems, inventory management, and multi-unit reporting and data. Wins like Gyro Hut are central to our expanding mid-market strategy. By partnering early in a brand's growth curve, we can grow alongside them. The momentum behind Aloha Next continues to build, and we currently have several enterprise RFPs in flight with it as a core component of our bid. We're very encouraged by the response of the nearly 60 demos and early labs we have conducted this year. Customer feedback has been very positive, particularly around our market-leading modern architecture, which brings faster deployment speed, ease of management, and a reduced total cost of ownership.

I attended the Restaurant Leadership Conference at the end of April and met with both current customers and prospects, all of whom echoed the same sentiment. They're energized by the innovations they are seeing, including our AI-powered features that make intelligence the new standard. With that, I will turn the call over to Brian. Brian?

Thank you, Benny, and good morning. Our results for the quarter were in line with our expectations and demonstrate the progress we have made to streamline our organization, including the recent sale of our Japan banking business, which is now reflected in discontinued operations. For the quarter, total revenue decreased 1% to $606 million. Both recurring software and recurring services revenue increased 4%, while non-recurring hardware and installation services revenue declined. Platform sites increased 7% to 83,000, and payment sites increased 3% to 8,500. Going forward, we'll be highlighting recurring revenue rather than ARR. However, we will still continue to report ARR in our metrics file. Adjusted EBITDA increased 5% to $78 million as margin expanded 80 basis points to 12.9%, driven by cost actions.

non-GAAP EPS increased 25% to $0.10 per share due to a lower than expected tax rate this quarter. However, we still anticipate our tax rate for the year will be approximately 21%. GAAP EPS was a loss of $0.04 per share in the quarter, driven by costs incurred due to the hardware ODM implementation. As Jim mentioned, we ended the first quarter with 21 customer contracts for our embedded VCP software applications, generally structured as 5-year subscription agreements at market terms. These contracts represented $293 million of remaining deal value, up 75% year-over-year and 15% sequentially. Turning to our retail segment results.

Total revenue increased 2% to $427 million, and recurring revenue increased 5% to $279 million, primarily driven by the increase in our VCP application sales and payments pricing initiatives implemented in the second half of 2025. Retail adjusted EBITDA increased 20% to $78 million as margin increased 280 basis points year over year to 18.3%, driven by software and payments revenue growth coupled with our cost initiatives. Turning to Restaurants. Total segment revenue of $179 million declined 6%, which reflects lower hardware sales, one-time services, and declines in our SMB business. Restaurants recurring revenue increased 1%, driven by growth from our mid-market and enterprise business. Restaurant adjusted EBITDA decreased 8% to $54 million, and margin decreased due to lower revenue.

Lastly, corporate expenses increased $4 million to $54 million, driven by our exit of the TSAs. Adjusted free cash flow before restructuring was $71 million versus use of cash in the prior year. This year benefited from favorable changes in working capital, cash inflows related to the implementation of the ODM agreement, and a delayed tax refund received in the first quarter. Cash flows related to the ODM are recognized under GAAP as cash from investing activities and included in our definition of adjusted free cash flow. Restructuring was $41 million in the quarter as previously discussed. We invested $36 million in capital expenditures during the quarter, a decrease of $3 million versus the prior year. We continue to expect our CapEx for the year to be similar to 2025.

Following the incremental repurchase authorization we secured at the end of February, we repurchased approximately $9 million of common shares in the first quarter. We ended the quarter with a net leverage position of 2.1 times based on our net debt as of March thirty-first and the last 12 months of adjusted EBITDA. Turning to our 2026 outlook, we're updating our full year guidance originally provided in February to reflect the divesture of the Japan banking business as detailed in today's outlook table.

Importantly, after normalizing both 2025 actual results and our initial 2026 guidance to exclude the Japan banking business, we now expect full year 2026 revenue of $2.188 billion-$2.303 billion, and adjusted EBITDA of $432 million-$447 million, representing pro forma revenue change of approximately a decline of 2%-3% growth and adjusted EBITDA growth of approximately 3%-7% year-over-year. We have also included a schedule in our metrics file that adjusts historical 2025 results for the impacts of Japan and hardware, providing a clearer view of the pro forma business. Based on this updated profile, we expect 2026 seasonality for revenue to be broadly consistent with 2025.

For adjusted EBITDA, we anticipate year-over-year growth to be more weighted towards the fourth quarter relative to the second and third quarters as our sales momentum builds and cost initiatives take hold. I will now turn the call over to the operator for Q&A.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad and raise your hand to join the queue. If you would like to withdraw your question, press the star one again. Your first question comes from the line of Will Nance of Goldman Sachs. Please go ahead.

Hey, thanks for taking the question. If I could just, maybe pick up where you left off there on, the shape of the year. I was wondering if you could provide a little bit more color on just how you're thinking about the cadence of margins across the 2 segments as we progress through the year.

Thanks, Will. What I would say about the segments in the rest of the year, we expect continued good performance in retail, driven by the software and payments initiatives, we expect EBITDA to be strong as well, like we saw in Q1. On restaurants, we expect the revenue and EBITDA declines to moderate as we go through the year. If I think about margin, we'd expect, you know, and after we normalize for net hardware, the retail margins would improve year-over-year, and the restaurant margins for the full year would be pretty stable year-over-year.

Okay, that's great. That's very helpful. I appreciate all the details on Cardtronics and the pro forma from the prior year. We'll take a look at that. If I could just ask a question on some of the disclosures around remaining contract value from the new platform. I was wondering if you could just talk about timelines around how this will translate to revenue over time when we could start to see some of this coming through the P&L. Thank you.

Yeah, I would just say that if you look at the remaining deal value or contract value, typically, those are five-year agreements and they would ramp as the deployments ramp. Just keep that in mind as you're modeling it, obviously the strong growth year-over-year would indicate that it's contributing to the P&L.

Well, while those, while we show the aggregate balance that's currently under contract, some of that is in the P&L this year, and it will continue to grow over time. What we're showing is we're having very strong momentum. We didn't disclose the numbers last year. We were waiting for annualizing of the contracts. They continued to ramp. The reaction from the marketplace continues to be very strong. We had six customers here last week seeing demos. We are very optimistic. That's why we talked about it at the end of last quarter or at the year-end last month, in February, excuse me, we'll start sharing more as the time moves on.

That's great. Well, congrats on the milestone there and thanks for taking the questions.

Thanks, Will.

Your next question comes from the line of Dan Perlin. Please go ahead.

Thanks. I wanted to just follow back up on the VCP platform disclosures as well. Jim, is there just any context you can give us kinda as we think about what it, you know, previously looked like? I mean, obviously, 21 new contracts is fantastic, and then $293 million kind of rolling through. I'm just trying to think about obviously it's up a lot, but, like, how that ramped. It feels like it ramped pretty quickly in the past, I guess, maybe a quarter or 2.

Well, I would as we've described, so if we started, you know, when I started last year, we really had one customer of size that had a few stores in. Today, they're well over 10 stores. I think in the aggregate, we have 100 with 500 lanes that are operating today. It's no longer the idea. It's actually in production in the stores as I just described. I think in terms of the ramp, a lot of it, and Darren can speak to it, a lot of it came during the fourth quarter, third and fourth quarter of last year, and then it's obviously rolled into this year as well. We just announced Stater Brothers this week. We also had Pilot, which was announced right after our February call.

Prior to NRF, these, this was kind of pre-sales type of engagements with customers, showing them labs, demos and labs. After NRF, which I think you were there too, we shared with our investor base or the people that wanted to see it in person, it has definitely picked up. As I just mentioned, you know, we're seeing customers come in here at a rate that I've not seen in the last two years I've been involved in, with NCR.

What really is compelling is that when we have 400 very large customers spanning the globe, in retail restaurants, in all the verticals that we highlighted in the comments, we're able to give them exactly what they have, but in an architecture which is not something that they currently have, but is definitely something they aspire to because of the speed at which they can then innovate, going forward, and in particular with AI, you know, becoming more prevalent in products. You put those two things together, they want a modern architecture now so that they can be, continue to be relevant in the market. I think Nick wants to add some thoughts.

Yeah, it, Dan, if you kind of think about what happened in the past, you know, this is a fairly typical move from a, you know, license and then maintenance revenue line to a subscription revenue line. If you think of some of the customers who are now moving on to the VCP, they would have bought licenses some time ago, and that would have been, you know, a lump of revenue when the license was contracted. Now we're moving from a sort of ongoing software maintenance annuity to a subscription annuity. You'd expect, particularly with large customers who want to go on a, you know, a 5-year agreement because it's a major program, you would see those larger subscription contracts.

In the past, we would have seen, you know, a software maintenance line rather than a full subscription line. I think if you compare, you know, the contract value, remaining contract value now to what we'd have had in the past, that's one of the major shifts.

One other piece I think Brian mentioned during his comment, Dan, is that in our revenue and earnings this year are some of the contracts that were signed last year. They're starting to show up in the earnings, and they're gonna continue to escalate. If you think of a funnel, what's going in is that five-year contract, as Nick just said. What's coming out is a piece of that each year. We've moved away from what used to be here called PAYGO, pay as you go, where you get paid either through a license, or you get paid when you open up a store or when the store goes live. It's more of a traditional SaaS structure, going forward, recognizing there is a ramp-in period.

These customers, you know, they take anywhere from 9 to 18 months to two years to ready themselves to do an upgrade. The upgrade of this system is really on us, and it's very quick to implement. It's much different than what they've experienced in the past.

That's great context. Thank you.

Yeah. Thank you.

Your next question comes from the line of Parker Lane at Stifel. Please go ahead.

Hey, good morning. Thanks for taking the questions. In the prepared remarks, you highlighted the data advantage of VCP as a real differentiator, and obviously you sit on a wealth of transaction history and data there. Can you just talk about how that data advantage is widening with VCP versus your historical platform and applications?

Yeah, thanks for the question, Parker. If you think about the previous platform, much of that work was done on-premise, so the software resided on-premise and then went either into a customer's data center for the transaction volume or into a single tenant hosted cloud environment. With our VCP, we have this cloud-native multi-tenant environment where all transactions flow for all of our customers. We have visibility. The customer gets the benefit because they get real-time insights from the data directly as the transactions flow from all of their stores or restaurants. Obviously, all of that data flows through our platform, which gives us the ability also to provide customers with additional insight and also to learn more.

As you rightly point out, we have essentially an enormous distributed data set from every single point of sale, self-checkout, kiosk, restaurant system in 35 countries. The more of our customers that migrate onto that platform, the more of the data flows into the platform, the more insights we can provide and the more integration benefit we can give to customers. Obviously, that also means, you know, we can benefit ourselves from providing insights and, you know, leveraging that data for our customers' behalf.

I just want to add, it's not specific to your question, but just as a point of clarification, because years ago when the company stood up the platform, the platform is GCP. When they stood up the platform, they took legacy, or we took legacy applications and engineered a way for the customers, our customers, to be able to extract some level of data by it, by what we refer to as attach to the platform. Sending transactions up to effectively aggregate amongst locations and then collate and have a report and insights. Today, what we've talked about, the $300 million that is referenced in the speech, the entire system, the application are sitting in the cloud at that point.

It's a completely different architecture. Beyond the fact that it's in a microservices structure, we're no longer selling applications that are monolithic, sitting on a point of sale in a restaurant or retail. I think that's an important distinction because we talked to attach to the cloud. That is a different structure today where the applications are actually physically there. Go ahead.

Yeah, and just maybe to draw out some of the benefits as well. If you mentioned that we mentioned in the prepared remarks, I think the example I gave was for one particular customer who in the month of April, we processed 150 million of their transactions and that represented about 900 million items sold. All of that data associated with what was sold flows through the platform, you know, the average basket size, the SKU count, the pricing, the promotions and so on. That all flows through the platform.

Then if you think of the opportunity we have with AI on top of that data, which is what we'll be showing at NRA in about 10 days' time, you can then use both agentic AI and generative AI to provide insights into the data. It's not just the fact that we have the data flowing through the platform, which gives real-time value, it's what we can leverage with AI on top of that to be able to bring additional value to the customers.

The case study I gave in the prepared remarks was the Picklist Assist we've rolled out across 35,000 lanes. The more we roll that out, which is essentially product recognition at the self-checkout, the AI tools in terms of product recognition and ROI across multiple retailers then in terms of the consistent product types, really starts to accelerate the customer benefits.

Appreciate that feedback. Just looking back at this remaining contract value, obviously really nice growth there in VCP to start. When you look at the customers that have taken a look at the demos or converted into a deal, are you finding that those are folks that would have otherwise been looking at an upgrade or renewal in the near term, and this is just a natural transition? Or are you also finding folks that, you know, maybe signed a contract in the last 2 or 3 years that just see a real opportunity to advance their operations with this platform, and they're going to go forward regardless of when they would have done an upgrade or renewal?

Yeah, I think it's more of the former. I think they see the benefit of it. one of the challenges our customers have is they're running on 20 and 30-year-old applications. Their customers, their end customers at a grocery store or a restaurant, have different expectations of what will be available for them in terms of data or being able to run promotions. All the stuff that we take for advantage of in our personal lives, it's not always as resident in some of the markets that we support. I sense is that market is very efficient. We've done some press releases, that gets people's attention. NRF, I think, was a very good opportunity for us to showcase what the company's been working on for years. We've also had a show in Europe.

I was at one in Tokyo earlier this year. There's another one coming in Singapore. I think some of it is we're doing what we can without spending a massive amount in marketing to get the word out on the benefits of this product. We've talked about it as a company for a number of years. It's what we have described the benefit of AI for us to be able to give to our customers exactly what they have, so you're not changing the way the store runs. You don't have to retrain your staff, and your staff could be, you know, tens of thousands or, you know, 50,000 people to run these grocery stores or restaurants.

That's an important selling feature, being able to put the customer back to where they are today, but in an architecture or a structure that enables them to move faster. It's one of the key features of the selling.

It is With 130 demos, and 22 customers signed as per my remarks, it's kinda all the above that you said. It's from new logos to existing customers accelerating the deployments quicker than they ordinarily would because the benefit of the tool is, they can keep their existing hardware in store and essentially upgrade their infrastructure from a monolithic to a microservice application. That's an enormous benefit for them in terms of accelerating the deployment schedule. Then we've got the standard kind of end of contract or annualizing of the contract process in terms of the renewal. It's a combination of all the above.

What I'm really pleased with is the sales cadence of all the sales teams across retail and restaurant in terms of the proactive nature of sharing the message and the fundamentally different model now that we're deploying across the organization.

I guess the last is relative to one of your comment was we don't need to wait till a customer's existing contract comes to end. We're happy to step out of that contract into a new one. I would say probably for most, if not all the ones other than the new ones, they probably were already in a contract. I think in, again, Benny's case on the restaurant side where we're still earlier, that started behind the retail side. To the extent somebody is renewing, they're renewing with the expectation they're gonna see the new product in a lab sometime this year.

Understood. Thanks for taking the questions.

Yeah. Thank you.

Once again, if you wish to ask a question, please press star 1 to join the queue. Your next question comes from the line of Dylan Bandy of Northcoast Research. Please go ahead.

Hey, guys. Thanks for taking the question. Looking at chip and hardware costs have been kind of elevated, have you guys seen any margin impact from that? If you are seeing that, have you been able to pass those costs onto your customers? Thanks.

We are seeing higher chip costs, and we are including that in our price to the customer, so it doesn't impact us. We've seen relatively healthy volume levels for hardware.

As we-

Okay, great. That's really. Oh, no, go ahead. Sorry.

I was just gonna say, as everybody's aware, we are also shifting out of the direct hardware business as of April 1st. We are still selling. The nice thing is the software that we're selling that we've just talked about, the new applications, we've been able to squeeze it into older hardware, as Darren was mentioning, so not to force customers. There's not a requirement to buy new hardware to be able to run the new software. I mean, depending on how old it is, that's not a requirement. We're trying to make it as easy as possible to transition to the new architecture.

Including hardware that's not our own.

Yeah.

Yeah.

Yeah. I wouldn't say we're entirely hardware agnostic, but if somebody wants to use somebody else's hardware, we're not standing in the way of that.

We're certainly seeing a change in customer behavior 'cause hardware, chip and hardware costs across every channel is obviously increasing. The buying pattern and trying to seek earlier delivery and certainty of delivery is kinda changing as I look at customers. It is actually enhancing our process in terms of getting more confirmed quicker orders because they're wanting to beat the price hike. As, as Brian said, we are, we are firmly passing through any increased hardware, chip, or supply chain associated costs.

Great. Thanks. That's really helpful. Just kind of another line of thought here. Looking at your guys' recent wins, are you seeing greater traction in the retail or restaurants business? Kind of how is the demand environment then different between those two verticals? Thanks.

You wanna start it, Benny?

Yeah. You know, I'll start it by saying, you know, from what you said in my prepared remarks, we're very encouraged with the growth we're seeing actually before I even talk about the demand in the enterprise and mid-market segments. That is very consistent to the conversations we've been having over the past few quarters. On top of that, as I stated in my remarks, the demos that we've conducted, about 60 demos, a number of actually labs that we have in enterprise space. On top of that, the number of RFPs that we have, significant growth than what we've seen in the past, you know, 2 years. That gives me a lot of confidence that the demand is not just stable but growing.

The feedback we've been getting is very positive on Aloha Next, as Jim just mentioned. We are a little bit earlier in the product rollout cadence compared to retail, but already the positive remarks that we're getting. It's not just the positivity, but also the quality of the feedback has been around resiliency and then speed. When I think about speed, it's not just speed of deployment, but it's also the speed at which the restaurants can keep up with their configuration, management pushing down promotions, managing their menu, and then the overall cost structure of their technology management, right, really reduced. All of this is driving a lot of speed.

Darren, you know, talked about the cadence of deployment, that how the retailers are pushing faster migration because they want to recognize this value. We're seeing, you know, the same thing. Demand remains very high. In mid-market, we announced one of the wins today. Again, they're very similar theme to the data question that you heard. We're talking to a lot of customers that in today's environment, with the new entrants that, you know, they've been using in their space as they try to grow, they're actually faced with a challenge to access data. In this current environment where they're trying to manage their cost structure, analytics, multi-unit management, all of these remain very fast. We're seeing healthy demand.

Very encouraged to what we're seeing in the second half as we prepare to launch Voyix.

Yep, similar story to Benny. On the retail side, obviously the sales cycles are very long in enterprise, but they're shortening dramatically as the message around the demos about the core solution and the adjacencies in terms of speed, loyalty, data, insights, microservices, flexibility, leveraging existing hardware, ours or third party. Those hooks, levers are truly landing in terms of speeding up the more greater efficiency, lowering the friction with our retailers. We're seeing very strong demand across all markets, all territories across the retail business. We're very pleased with the demand and the sales approach of the team.

Yeah, maybe to add on, I think in that question, there's also this theme hidden that says, how is the market, at least in restaurant? You know, we're seeing, yes, food costs stabilizing, you know, as you've seen consumer property demand returning, people are visiting restaurants more and more, but what they're not doing is, you know, that discretionary spend hasn't returned yet. You know, people are not buying that extra drink or, you know, ordering dessert and so on. What restaurants are faced with is, how do I manage my cost structure? Labor costs still remain high, so anything that drives efficiency, anything that allows them to improve their margin. Data and AI remains very important as they not necessarily just to augment employees, but also to really optimize their cost structure is really important.

I'm excited again to what we're gonna showcase at NRA that Nick talked about that really starts to address this, and this is driving a lot of the demand that we see.

Thanks, guys. That's really helpful. I appreciate it.

Thank you.

Your next question comes from the line of Matt Summerville of D.A. Davidson. Please go ahead.

Thanks. 2 questions. Just getting back to the remaining contract value, given that that's sort of a new statistic, where would you like to see that number kind of exiting 2026 and building into 2027? Is there any way to help us dimensionalize that? Underpinning that, is there a way that you can quantify the magnitude of funnel that supports that go forward view on the RCV? I have a follow-up.

I guess to answer your first question, I'll be flippant. I expect it to be bigger. Look, it's early stages. We didn't do this last year for just that reason, because we didn't really have compares. Now the compare also is against the first quarter of last year, and, you know, it's still very early last year in this sales cycle. I see it accelerating. It is really all we're doing right now. The GC is sitting in the room, and she's constantly complaining about all the RFPs and stuff that we're working on. I have customers coming in that I would say last year had a completely different view on NCR. You know, it's, for me, it's nice to see all.

It's a completely different conversation than what I experienced last year. The mindset for our customers has shifted because in the past it was, well, you know, I have this 20 and 30-year-old application. As I said to them, how many people have a 20 or 30-year-old car they're trying to keep running and running and running? I think our customers have, you know, been successful and as have we in keeping this going for a very long period of time. They would like to see something new. NCR, while it acquired a lot of things over the years, this is the first time we're really bringing something of scale to the market that we built ourselves in-house with an amazing engineering team. Yes, I think it's gonna continue to grow.

I guess, you know, if we took the uplift that Nick was talking about, you know, as we say, market terms, it's what's the new price off of what we historically charge for software maintenance. You know, we feel that that's market. I think we've done well in terms of the investment. This product is pretty significant over the years. I think it's still early for us to kind of give a long range view on it. I think the trends, I mean, I don't know that it's gonna grow at 70% quarter after quarter, and I don't think that's a failure if it doesn't, because, you know, these are our existing and new customers. They go through Most of them are RFP cycles because they're enterprise. So there could be some ups and downs to it.

Yes, I expect that number to only get bigger and bigger and bigger over time. The cadence, I think this will be a good year. That's why we went ahead and put the numbers out there that we're off to a good start, and I expect that to continue.

I think you said about the quality or quantifying the funnel. All I can say is the discipline of driving a proper sales management funnel, our sales support team has been very busy in building those processes to ensure there is ruthless discipline in the customer engagement, both on restaurants and retail across all our existing customers, and a discipline in terms of the RFP approach, in terms of the new product messaging, in terms of core and adjacencies that we're focused on. Those demos and the follow-through and the discipline and the engagement and the touch points, and the sales discipline is firmly there.

You know, our entire kind of sales ecosystem is driven around driving up the remaining contract value funnel and pipeline to drive that delivery momentum over the next few years. There's a lot of that dedicated effort on that funnel management.

Yeah. The other piece is the contracts we have today. On a very limited basis do we end a service something, mainly a branch of an existing application, because we're trying to bring it back to the mothership instead of continuing to support these bespoke solutions. That is kinda the next horizon for us, which will cause customers to be more interested. If they're trying to stay with what they have for one reason or another, at some point we're gonna end the services. We have a lot of resources, again, keeping these old products running. It's better for the customer, it's better for us if we come to an end sooner rather than later. We haven't come out with specifics yet. I think that'll be later this year, and I think that'll spur some additional growth.

Got it. Just 2 final ones. Can you remind me what, how sort of the cost out cadence looks as you move through the year, and ultimately what the aggregate net cost out number is? Just quickly on restaurants, when does the SMB headwind begin to flip to a tailwind for you guys specifically? Thank you.

I'll start on the cost side, Matt. Our cost program is about $90 million this year. A lot of those actions are already behind us. They're either taken last year or at the early part of this year. Most of it's around labor. There are some initiatives in development, product development and services that do continue, we'll get a little bit more benefit as we get into Q4. A lot of it's behind us already in terms of actions taken.

Just to give you an order of magnitude, since the spin, the company's taken out 20% of payroll costs through the end of last year. It was kind of a byproduct as I get feedback internally.

You know, as a $2 billion becoming $8 billion company, you're gonna add a lot of costs, but the opposite also happens. An $8 billion becoming a $2 billion company, that's one of the reasons that we've, you know, we've gone through the announcements that we have. You never say it's completely over, but at this stage, that's not a focus of the company. The focus of the company, the divestitures are largely, if not entirely behind us. The focus is entirely on bringing product to market to new and existing customers.

On the SMB, I mean, I, again, I would start off by saying, very encouraged with the growth that we're seeing on enterprise and mid-market, that will continue. Overall, including for SMB, the inflection point that in restaurant we're seeing is tied to the Aloha Next launch. Specifically for SMB, it is tied to Aloha Next for SMB, which is restaurant in a box. Again, we're not seeing a demand challenge. We actually see really good signals as we prepare for that launch. I as I have said, we have been talking to both our direct SMB customers as well as in the dealer channel, which remains a very key channel for us.

We've shown to some of our dealer channels, the larger ones, as well as customers in that segment, very positive feedback. The internal mechanics that Darren talked about, the sales operation, not just for enterprise, but also on the SMB side, there is a lot of work being done to prepare for that. You know, to your question of when does that inflection happen, it's really in that second half as we launch Aloha Next going into next year, we'll start to see that because it's gonna be all about ease of deployment, ease of management of the solution, as well as the overall economics, the packaged economics with embedded payments. The early signals tells us, you know, that that's, that would be the inflection point.

I wanna add to that, Matt. In the enterprise space, very hard to switch out. A much different competitor profile in enterprise or even mid-market than in the SME space. You know, coming from payments, as you know I did, lots of ISVs, software companies running around the SME space, lots of small merchants, that turnover quite high as it is, and restaurants in particular is fairly high. Having an application, which we do, even Aloha Cloud, which I think is fit for some segments, but not all of the SME space, part of our challenge is just a product, having a competitive product in the marketplace. It's not a performance, it's not the sales force, it's, Aloha Cloud didn't meet the needs of the market. We had this massive investment in this platform that we've been talking about.

We weren't taking advantage of it on the restaurant side. You know, during last year, Nick, Benny, myself finally came to a conclusion that we needed to pivot. It's one of the reasons that SME is a little bit behind, but I have confidence that Benny, Miguel, the rest of the team are gonna catch up really quickly. Engineering is laser focused on getting a product fit for the market, early second half of next year. I mean, next year, I'm sorry. This year. My year is confused. Thank you.

Okay, there are no further questions at this time. I will now turn the conference back over to Jim Kelly, the CEO, for the closing remarks.

Thank you, operator, and thank you all for your continued interest in NCR Voyix.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.