NCR Corporation (NCR) Q1 Earnings & Revenues Miss Estimates

NCR Corporation NCR reported first-quarter 2022 non-GAAP earnings of 33 cents, missing the Zacks Consensus Estimate of 64 cents per share.

The enterprise technology provider’s bottom line plunged 35.3% from 51 cents per share reported in the year-ago quarter.

For the first quarter of 2022, the company reported revenues of $1.86 billion, lagging the consensus mark of $1.92 billion. The top line witnessed a year-over-year surge of 21%, driven by contributions from the Cardtronics business, and solid growth across the company’s Payments, Digital Banking and Hospitality segments.

NCR Corporation Price, Consensus and EPS Surprise

NCR Corporation Price, Consensus and EPS Surprise

NCR Corporation price-consensus-eps-surprise-chart | NCR Corporation Quote

NCR progressed significantly with its strategic growth initiatives, which are transforming it into a software platform and payments company. The company’s recurring revenues improved 35% to $1.18 billion in the quarter under review.

However, the Russia-Ukraine conflict, inflation and the Omicron wave remained headwinds.

Quarterly Details

From first-quarter 2022, NCR changed its reporting segments to correspond with changes to its operating model, management structure and organizational responsibilities. The new reportable revenue segments are: Payments & Network, Digital Banking, Self-Service Banking, Retail, and Hospitality.

Payments & Network revenues climbed 12% year over year to $299 million, primarily driven by merchant acquiring and Allpoint network (including the contributions of Cardtronics and newly acquired LibertyX business).

During the first quarter, Self-Service Banking revenues declined 3% to $611 million. The segment continued to witness strong momentum as a result of accelerated transformation toward adopting software-based solutions like ATM as-a-service solution.

Retail revenues rose 5% to $546 million, primarily on higher self-checkout revenues and point-of-sale revenues across its food-drug-merchandise and convenience-fuel-retail customers.

Hospitality revenues climbed 18% to $211 million, mainly driven by an increase in point-of-sale revenues across the company’s enterprise and small-and-medium business customers.

NCR’s Digital Banking Solution continued witnessing solid momentum, with revenues increasing 11% year over year to $136 million. Digital banking registered users remained flat year over year at 25.3 million.

Operating Details

Non-GAAP gross margin of $449 million was up 5.6% year over year. Non-GAAP gross margin rate contracted 340 basis points (bps) to 24.1%, primarily due to elevated component and freight costs, partially offset by price hikes.

Non-GAAP operating expenses increased 17% year on year to $325 million, mainly due to the company’s planned increase in research and development costs related to higher strategic investments and inclusion of Cardtronics expenses.

Adjusted EBITDA increased 5% year over year to $271 million. The adjusted EBITDA margin contracted 220 bps to 14.5%.

Non-GAAP operating income decreased to $124 million from the year-ago quarter’s $148 million. Non-GAAP operating margin contracted 290 bps to 6.7% from the year-earlier quarter’s 9.6%.

Balance Sheet & Other Details

NCR exited the March-end quarter with cash and cash equivalents of $412 million compared with $447 million reported during the December-end quarter.

Free cash outflow totaled $10 million compared with the prior quarter’s cash inflow of $100 million. Net cash provided by operating activities was $38 million in the first quarter.

Guidance

For the full-year 2022, NCR now anticipates revenues of approximately $8 billion, compared with the earlier guidance of $8-$8.2 billion.

The company now expects adjusted EBITDA in the band of $1.4-$1.5 billion, lower than the previous estimate of $1.5-$1.575 billion.

Non-GAAP diluted earnings are now projected to be $2.70-$3.20. compared with the prior range of $3.25-$3.55 per share.

Zacks Rank & Key Picks

NCR currently carries a Zacks Rank #3 (Hold). Shares of NCR have fallen 11.7% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Yelp YELP sporting a Zacks Rank #1 (Strong Buy), Gogo GOGO and Analog Devices ADI, both carrying a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Yelp's first-quarter 2022 loss has been revised a couple of cents southward to 11 cents per share over the past 60 days. For 2022, earnings estimates have moved north by 53.6% to $1.06 per share in the past 60 days.

Yelp's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 632.9%. Shares of YELP have fallen 18.8% in the past year.

The Zacks Consensus Estimate for Gogo's first-quarter 2022 earnings has been revised downward by a penny to 13 cents per share over the past 30 days. For 2022, Gogo's earnings estimates have moved north by 25% to 65 cents per share in the past 60 days.

Gogo's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 65%. Shares of GOGO have soared 71.8% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 4 cents to $2.12 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 11 cents to $8.43 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have decreased 2.1% in the past year.

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