NCR Voyix’s preliminary third quarter results highlighted the momentum behind its software-as-a-service (SaaS) model, amid projections that nearly two-thirds of the firm’s revenues will be recurring in nature in three years.
Company materials and commentary reflected the legacy NCR business, inclusive of NCR Atleos, which was separated as an independent, publicly traded company last month.
NCR Voyix CEO David Wilkinson said that the company is on pace to generate about $4 billion in annual revenues, with about half of that tied to recurring business.
“We operate in a large and growing addressable market valued at a minimum of $25 billion, and we maintain a market leadership position within the segments we serve,” Wilkinson told analysts. In the latest quarter, recurring revenues were 56% of the consolidated top line. The company is projecting recurring revenues to grow to 65% of the company’s top line by 2027.
The combined segments, for the third quarter, logged $953 million in sales, and recurring revenues gained 7% in the same period.
The momentum comes, the CEO added, amid the continued shift to a SaaS model, and as “all of our customers face the challenge of differentiating their customers’ and associates’ experiences. This requires modernization of their technology.”
The presentation materials that accompanied earnings showed that retail-segment revenues were up 2% in constant currency, year over year, to $1.7 billion year to date, boosted in part by self-checkout and implementing point of sale and self-checkout software to subscription models. The restaurant segment was up 1% over the same timeframe to $696 million. Digital banking outpaced those segments with a 5% growth rate through the three quarters of 2023 to $423 million.
“We’re in a unique position to enable banks and credit unions to accelerate their strategies to create an entirely new customer experience, and we’re the only provider offering a unified customer experience for both digital and physical channels,” he told analysts.
The company’s “payment attach rate” for new customers remains at approximately 90%, resulting in a 41% increase in payment sites, Wilkinson said during the call.
CFO Brian Webb-Walsh said in his own remarks during the call that the recurring revenue gains reflected NCR Voyix’s strategy to shift customers to the firm’s SaaS platform.
The company more than doubled the number of retail platform sites compared to the prior year.
During the question-and-answer session, Wilkinson said, “Payments is still a critical part of our go-forward strategy to expand ARPU [average revenue per user] through the platform,” adding, “Our strategy going forward is really to start payments on the point of sale software and complete payment through processing to really take pain off of our merchants and complete the payment end to end.”