The ATM industry, typically known for its conservative approach, has seen significant changes. Last year, NCR Corporation, a consulting, technology, software, professional services, and electronic products provider announced its decision to split into two separate entities. The restructuring aimed to create one business dedicated to retail, hospitality, and digital banking and another focusing on ATMs. The new divisions are Atleos and NCR Voyix, each bearing strategic importance for the industry.
This reorganization signifies NCR’s strategy to operate as two independent, publicly traded companies: NCR Voyix, which will concentrate on digital commerce, and NCR Atleos, which specializes in ATM services. The split was finalized on October 16, 2023, at the end of the business day.
The name change took effect on October 13, 2023. On October 17, 2023, the company’s stock started trading under the new ticker symbol “VYX” on the New York Stock Exchange.
Key Takeaways
- Strategic Division for Focused Growth: NCR Corporation split into two independent entities, NCR Voyix, and NCR Atleos, to enhance operational efficiency and focus on distinct market segments. NCR Voyix now handles digital commerce, retail, and restaurants, while NCR Atleos specializes in ATM services.
- Financial and Operational Adjustments: NCR Voyix is implementing cost-saving strategies to address financial challenges post-split. These measures include reducing physical office space, selling real estate, and enhancing remote support capabilities to improve operational efficiency.
- Technological Innovations: Both companies are exploring advanced technologies. NCR Voyix is developing new digital commerce features and checkout options, while NCR Atleos focuses on enhancing ATM services with digital currency integration and reducing physical interactions.
- Enhanced Revenue Streams: NCR Atleos reported a significant increase in recurring revenue, emphasizing its focus on long-term, sustainable growth. This shift aligns with the company’s goal of expanding global ATM access and integrating digital solutions.
NCR Corporation’s Strategic Split: Transforming Operations and Enhancing Value
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The company, known initially as NCR Corp., has continually adapted to changing technological landscapes since its inception 140 years ago when it manufactured the first cash registers. Under the leadership of CEO David Wilkinson, who has been with the company for 14 years, NCR has undergone one of its most significant transformations yet. Recently renamed NCR Voyix, it experienced a major shift following its division into two separate entities.
In October of the previous year, NCR divided its operations following a near acquisition by Veritas Capital. NCR Voyix assumed responsibility for the restaurant, digital banking, and retail sectors, while NCR Atleos took over ATM operations. According to Wilkinson, this division was necessary due to these sectors’ distinct missions and operational needs, which presented opportunities for optimization that were not feasible under the unified management.
The company’s split aimed to enhance value and operational efficiency, as stated by Frank R. Martire, Executive Chairman of the NCR Board of Directors, during the initial announcement in 2022. Martire highlighted that creating two focused, independent entities would allow for accelerated transformation and more effective implementation of growth strategies, enhancing their ability to capitalize on future opportunities.
As part of the separation process, all outstanding shares of NCR Atleos common stock were distributed pro rata to Voyix common stockholders. This distribution is meant to be tax-free for federal income tax purposes, except for any money received in lieu of fractional shares.
Following the spin-off, NCR Atleos began trading on the New York Stock Exchange under the ticker symbol “NATL,” NCR Voyix started trading under “VYX” on October 17, 2023.
NCR Voyix Faces Financial Challenges and Implements Cost-Saving Strategies Post-Split
Eight months after splitting from Atleos, NCR Voyix, Georgia’s fourth largest fintech company, is undergoing significant organizational changes and adjustments. Since the division, NCR Voyix has faced considerable financial challenges, evidenced by a drop in its stock price from just over $16 to $12 since October.
NCR Voyix reported earnings of $862 million for Q1 2024, a 6% decrease compared to the previous year and below the anticipated $898.43 million. The company also recorded a $40 million loss from continuing operations, which is an improvement over the $66 million loss in Q1 2023, but it remains a significant drop from the $31 million net income reported previously.
Industry specialists highlight the difficulties of splitting a large, established company, pointing out that significant improvements are required to rebuild investor trust. The separation required NCR Voyix and Atleos to dismantle their joint operations, including IT, human resources, and legal services, leading to increased inefficiencies and continued financial burdens.
Currently, NCR Voyix is aiming to cut these inefficiencies. A company spokesperson, David Wilkinson, announced goals to save $100 million annually, with $70 million expected in the first year. These savings aim to offset the expenses incurred from the separation and the costs of operating separate corporate structures.
NCR Voyix is implementing several strategies to stabilize and expand its operations. These strategies include reducing operational expenses by decreasing the number of physical offices, enhancing efficiency in product design, and improving service delivery methods. The company also aims to boost cash flow by selling off real estate and refining product and service processes.
David Wilkinson explained that the company is shifting towards more remote solutions, which allow them to link all devices in a store or restaurant directly to their help desk. This connectivity could enable them to address issues remotely rather than deploying technicians to the site.
Wilkinson noted that this approach would not only reduce costs and the company’s carbon footprint but also lower training expenses, as technicians will no longer require specialized training for ATM repairs. Additionally, the company is enhancing its use of technology to support remote troubleshooting, further decreasing the frequency of on-site visits and lowering overall operational costs.
NCR Voyix is enhancing its digital commerce initiatives as part of its growth strategy. The company recently introduced new features such as Aloha Pay-At-Table and Aloha Kiosk, which are designed to improve operations and customer interactions in the restaurant industry. The Atlanta headquarters of NCR Voyix includes 100,000 square feet of lab space and a sales experiment area where employee purchases are monitored. This setup helps gather data on movement and payment methods, informing the development of technologies that simplify the sales process.
NCR Voyix is also exploring advanced checkout options such as computer vision technology, which recognizes items without barcode scans, similar to systems used in Amazon Go stores. Additionally, the company is experimenting with advanced identification technologies, including retinal and palm scans.
The company anticipates achieving mid-single-digit growth by 2027 with enhanced profitability. Key indicators of the success of these strategies will be the number of sites integrating with NCR Voyix’s platform and the expansion of payment locations.
NCR Atleos Reports Increased Recurring Revenue and Focuses on Technological Advancements
The leadership team at NCR Atleos, headed by Tim Oliver as the incoming CEO, consists of a combination of existing NCR executives and industry specialists. The company assists customers in expanding their global ATM access, including incorporating digital currencies into ATM transactions.
In Q1 of 2024, NCR Atleos saw a significant rise in its recurring revenue, which now makes up a significant portion of its overall revenue. The Q1 revenue stood at $1.05 billion, of which $763 million was recurring, up from $986 million and $710 million in the same period the previous year. Slightly less than the previous year’s 22.3% gross profit margin, the first quarter’s gross profit of $221 million had a GAAP gross profit margin of 21.0%.
Additionally, NCR Atleos is investigating new technologies to enhance its service offerings. This includes implementing technologies that reduce the need for physical interactions, aligning with current digital banking trends and customer service automation trends.
Spin-off Details
The spin-off was completed at 5:00 PM local New York City time on October 16, 2023. All common stockholders registered as of 5:00 PM local New York City time on October 2, 2023, received one share of Atleos common stock for every two shares they held. Additionally, stockholders eligible as of this record date were compensated with cash for any fractional shares.
About NCR Voyix
NCR Voyix Corporation, formerly known as NCR Corporation, is a leader in providing global digital commerce solutions. The company, headquartered in Atlanta, Georgia, operates with around 15,000 employees spread across 35 countries. It has a rich history dating back to 1884, and it was rebranded to NCR Voyix in October 2023.
NCR Voyix focuses on three main segments: Retail, Restaurants, and Digital Banking. Its offerings include a comprehensive range of software, services, and hardware tailored to improve customer experiences and operational efficiencies. For instance, it provides point-of-sale systems, digital banking solutions, payment processing technologies, and self-service kiosks, among other products.
Additionally, the company offers services for fraud and loss prevention, inventory management, transaction processing, restaurant management, consumer engagement, and both managed and professional services. NCR operates internationally across the Americas, the Middle East, Europe, Asia-Pacific, and Africa, with its headquarters in Atlanta, Georgia, USA.
About NCR Atleos
NCR Atleos Corporation, a financial technology company based in Atlanta, Georgia, was established in 2023 and operates globally across the United States, Europe, the Middle East, Africa, and the Asia Pacific. The company focuses on three primary segments: Self-Service Banking, Network, and Telecommunications & Technology (T&T), specializing in self-directed banking solutions.
In the Self-Service Banking segment, NCR Atleos provides products like automated and interactive teller machines and services covering installation, maintenance, and comprehensive management of ATM channels. Their Network includes a broad network of ATMs and financial service kiosks, supporting diverse financial entities with services such as ATM branding and digital currency transactions. The T&T segment delivers advanced network services tailored for various industries, enhancing enterprise infrastructure capabilities. With 20,000 employees, NCR Atleos aims to advance the financial technology landscape by making banking more efficient and accessible worldwide.
Conclusion
The split of NCR Corporation into NCR Voyix and NCR Atleos marks a strategic reorganization to enhance operational efficiency and focus on distinct market segments. NCR Voyix, now dedicated to digital commerce, retail, and restaurant sectors, faces financial challenges but implements cost-saving measures and new technologies to stabilize and grow. NCR Atleos, focusing on the ATM industry, has seen an increase in recurring revenue and is exploring technological advancements to improve services.
This division allows both companies to pursue specialized growth strategies, ultimately aiming to enhance shareholder value and adapt more swiftly to market demands. The successful transition of these entities highlights NCR’s commitment to evolving with industry trends and maintaining its leadership in financial technology.
