NCR Voyix Corporation — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 14, 2024. Figures are in U.S. dollars. The filing presents NCR Voyix’s continuing operations separately from NCR Atleos, which was spun off on October 16, 2023. Accordingly, prior-period comparisons reflect continuing operations unless noted otherwise.
Business context
NCR Voyix provides software, services, payments acceptance and related hardware for retailers, restaurants, banks and credit unions. Following the spin-off of its ATM-focused business, it reports Retail, Restaurants and Digital Banking segments. Management’s strategy is to grow cloud, software, services and recurring revenue.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $3.830 billion | $3.793 billion |
| Recurring revenue | $2.195 billion; 57.3% of revenue | $2.120 billion; 55.9% |
| Software and services revenue | $2.753 billion; 71.9% of revenue | $2.649 billion; 69.8% |
| Gross margin | $962 million; 25.1% | $978 million; 25.8% |
| Operating income | $37 million; 1.0% margin | $136 million; 3.6% margin |
| Net income (loss) from continuing operations | $(586) million | $(203) million |
| Adjusted EBITDA (non-GAAP) | $616 million; 16.1% margin | $596 million; 15.7% margin |
| Cash from operating activities | $694 million | $427 million |
| Capital expenditures | $377 million | $377 million |
Revenue rose 1%: service revenue increased 3%, while product revenue declined 3%, reflecting lower self-checkout and point-of-sale hardware revenue. Excluding specified adjustments, management reported gross margin of 27.9% in 2023 versus 28.0% in 2022. Fourth-quarter revenue was $963 million; gross margin was $181 million; operating loss was $130 million; and continuing-operations loss was $258 million.
At year-end, cash and cash equivalents were $262 million and total debt was approximately $2.6 billion. The company reported $351 million of undrawn revolving credit capacity. Approximately 93% of borrowings were fixed-rate; reported variable-rate debt remained exposed to interest-rate changes. The credit agreement imposes a maximum leverage ratio of 4.75x through September 2024, tightening thereafter. Cash from operations improved year over year, principally due to favorable working-capital movements.
Segment results: Retail revenue was $2.177 billion, flat year over year, with Adjusted EBITDA of $411 million, up 7%. Restaurants revenue was $886 million, up 3%, and Adjusted EBITDA was $197 million, up 23%. Digital Banking revenue was $579 million, up 6%, while Adjusted EBITDA was $219 million, down 6%.
Material changes, unusual items and risks
- Atleos spin-off: The separation reduced NCR Voyix’s size and diversified business portfolio. The company recorded $99 million of continuing-operations separation costs and a $226 million tax expense related to the transaction. Atleos’s historical results are reported as discontinued operations.
- Fraudulent ACH disbursements and controls: In February 2024, the company identified $34 million of unauthorized disbursements through that date; approximately $11 million had been recovered by the filing date. The amount through year-end 2023 was $23 million. Approximately $11 million had been incorrectly recorded in prior interim financial statements, which were revised; the company said the errors were not material to previously issued periods. Management and the auditor identified material weaknesses in controls over ACH disbursements and accounts-receivable/payable clearing accounts. Disclosure controls and internal control over financial reporting were ineffective at year-end. Remediation is ongoing.
- Cyber incident: A ransomware incident in April 2023 disrupted certain Aloha cloud services and Counterpoint for some customers; functionality was restored and financial reporting systems were not affected. The company recognized $36 million of incident-related costs, expected $19 million of insurance recovery, and had received $5 million by year-end. Further claims or costs remain possible.
- Environmental contingencies: Year-end reserves were $141 million for Kalamazoo River, $22 million for Fox River matters subject to final indemnitor reconciliation, and $7 million for Ebina. The Kalamazoo reserve rose from $90 million in 2022; the company notes actual remediation costs could be substantially higher under estimates it does not currently consider reasonably estimable. The company expects to manage retained environmental liabilities after the spin-off, subject to specified Atleos contribution terms.
- Other financial pressures: Interest expense increased to $294 million from $285 million, while the company recorded a $46 million debt-extinguishment loss. Continuing-operations net loss included significant spin-off tax effects and other special items. Adjusted EBITDA is non-GAAP and excludes items including restructuring, separation, ransomware and ACH costs.
- Preferred stock and liquidity: Series A preferred stock had a $276 million redemption value and a 5.5% cumulative dividend. Holders had a scheduled put right beginning March 16, 2024; inability to repurchase shares when required could increase the dividend rate to 8%. Common-stock dividends were not anticipated in the immediate future.
Outlook: The filing provides no quantified 2024 revenue or earnings guidance. Management expects continued investment in software and services and says recurring revenue may make results more predictable over time, but notes that macroeconomic, foreign-exchange and geopolitical effects remain uncertain. Foreign exchange movements reduced 2023 revenue by 1% and may continue to weigh on 2024 results. Management also expects to contribute approximately $13 million to international pension plans and $21 million to the postemployment plan in 2024.
Audit: The auditor expressed an unmodified opinion on the financial statements but concluded that internal control over financial reporting was not effective as of December 31, 2023. Critical audit matters included spin-off goodwill allocation and spin-off tax accounting.
Investor verification priorities
- Track recovery of the unauthorized ACH funds, any insurance proceeds or claims, and completion and testing of control remediation.
- Assess post-spin-off performance and comparability, including separation costs, tax effects and any remaining business transfers to Atleos.
- Monitor debt, covenant headroom, interest costs, receivables-facility renewal and the Series A preferred stock put and dividend obligations.
- Follow the Kalamazoo River reserve, remediation estimates and expected contributions from co-obligors and indemnitors.
- Reconcile GAAP losses to Adjusted EBITDA and evaluate recurring-revenue growth alongside margin trends and hardware declines.