NCR Atleos outlines 40% ATM-as-a-Service growth target and share repurchases as hardware demand accelerates

Earnings Call Insights: NCR Atleos Corporation (NATL) Q3 2025

MANAGEMENT VIEW

* CEO Timothy Oliver highlighted that the separation from legacy NCR is now complete, enabling company resources to shift from transition activities to growth: "The magnitude of the effort and of the accomplishment cannot be overstated. We bifurcated or duplicated 140 years' worth of IT systems and hardware. We physically separated hundreds of global locations. We established dozens of new legal entities. We migrated over 700 critical customer connections and completed over 200 transition service agreements."
* Oliver emphasized two primary goals: establishing transparent, predictable financial performance, and deploying free cash flow for debt reduction and shareholder returns. He noted, "In the third quarter, our seventh full quarter as a separate publicly traded company, Atleos extended a series of steady financial performance that has repeatedly been consistent with our expectations and our external guidance."
* The company crossed its targeted leverage threshold of 3x and expects to reach about 2.8x by year-end. Oliver announced plans to repurchase shares: "We expect to begin repurchasing Atleos shares in the upcoming trading window and to establish a 10b5-1 plan that dictates the repurchase program thereafter."
* Growth was driven by robust hardware revenue, record production from the Chennai facility, and a 37% increase in ATM-as-a-Service revenue. The Service First initiative improved customer satisfaction, reflected in a 30% rise in Net Promoter Score.
* CFO R. Wamser stated: "Results for the quarter either met or exceeded the upper end of our guidance ranges and included 6% core top line growth and a 7% increase in EBITDA, including 8% growth in the core business, strong margins and an impressive 22% earnings per share growth."

OUTLOOK

* The company reaffirmed full-year 2025 guidance, anticipating free cash flow conversion above the 30% target. Management expects further improvement, approaching 35% of adjusted EBITDA over the next 12 months.
* Oliver projected ATM-as-a-Service to continue growing at about 40% in Q4 and through 2026, noting, "Think about a 40% growth rate in Q4 and a 40% growth rate in 2026."
* The company expects to begin share repurchases in Q4 under a $200 million program, as previously authorized by the Board.

FINANCIAL RESULTS

* Third quarter adjusted EBITDA reached $219 million, with an adjusted EBITDA margin of 19.5%. Free cash flow for the quarter was $124 million. Net leverage improved to 2.99x, with a net debt balance under $2.5 billion and unrestricted cash of just over $400 million at quarter end.
* Self-service banking segment revenue grew 11% year-over-year, reaching $744 million, with adjusted EBITDA up 21% to $196 million. Recurring revenue mix stood at 57%, and annual recurring revenue rose to $268 million.
* ATM-as-a-Service revenue reached $67 million, growing 37% year-over-year. Gross profit increased 65%, with gross margin up 700 basis points to 40%. The segment's backlog was up approximately 100%.
* Network segment revenue was $328 million, down 1% year-over-year. Cash withdrawal transactions were 4% lower than the prior year, but deposit volumes increased 90% year-over-year. Adjusted EBITDA for the segment was $93 million with a 28% margin.

Q&A

* Keen Fai Tong, Goldman Sachs: Asked about prepaid card transaction trends and tariffs. Oliver responded that prepaid volumes stabilized towards the end of Q3, and tariffs are expected to total $25 million for the year, with budget planning assuming a 25% rate for next year.
* Matt Summerville, D.A. Davidson: Inquired about the transactional mix and as-a-service backlog. Oliver and MacKinnon explained withdrawal transactions still make up the majority of network revenue, but deposit transactions—now up 90%—are the highest margin. Wamser and Oliver confirmed as-a-service backlog and ARPU are stable, and hardware demand and bookings remain strong.
* Dominick Gabriele, Compass Point: Asked about the recycler product and hardware sales impact. Oliver described strong recycler adoption by large banks and expects hardware revenue to increase next year. He emphasized that growing the installed base is critical for recurring revenue streams.
* Antoine Legault, Wedbush Securities: Queried about managing vault cash. MacKinnon clarified the current vault cash is $2.6 billion and detailed ongoing efficiency efforts to optimize this expense.

SENTIMENT ANALYSIS

* Analysts displayed a neutral-to-slightly-positive tone, probing on transactional mix, tariffs, and ongoing growth rates, with questions focused on business stability and margin sustainability.
* Management maintained a confident and optimistic tone in both prepared remarks and responses, frequently citing, "We are confident..." and "We feel very good about backlog."
* Compared to last quarter, both management and analysts showed similar levels of confidence, with management emphasizing steady progress and analysts focused on growth sustainability and risk mitigation.

QUARTER-OVER-QUARTER COMPARISON

* Guidance remained consistent, with reaffirmed targets for revenue, adjusted EBITDA, and free cash flow conversion.
* Strategic focus shifted more explicitly to capital returns, particularly share repurchases, following the achievement of leverage targets. Hardware strength and ATM-as-a-Service growth rates continued at high levels, with recurring revenue mix stable.
* Analysts' questions maintained focus on growth drivers, margin trends, and risk factors, mirroring previous quarter concerns but adding more scrutiny around hardware cycle sustainability and tariff impacts.
* Management’s tone remained confident, highlighting operational execution and robust demand, especially in hardware and ATM outsourcing.

RISKS AND CONCERNS

* Management noted persistent high tariffs, macroeconomic pressures, and volatility in payroll card transactions as ongoing risks. Oliver stated, "We scrambled to reduce costs and change where we ship some machines from to minimize the impact of tariffs this year."
* Vault cash costs and interest rate fluctuations were cited as significant expense drivers, with ongoing optimization efforts in place.
* Analysts raised concerns around the sustainability of as-a-service growth, hardware demand, and the impact of tariffs and regulatory changes on transactional volumes.

FINAL TAKEAWAY

NCR Atleos completed its post-spin separation and delivered steady financial results in Q3 2025, driven by hardware and ATM-as-a-Service momentum, robust backlog, and improved customer satisfaction. The company reaffirmed guidance, signaled confidence in sustained growth—especially in recurring services and ATM outsourcing—and announced the start of a $200 million share repurchase program. Management expects continued progress in 2026, supported by a strengthened balance sheet, disciplined capital allocation, and operational initiatives aimed at margin expansion and free cash flow improvement.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/natl/earnings/transcripts]

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* NCR Atleos Corporation (NATL) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4839945-ncr-atleos-corporation-natl-q3-2025-earnings-call-transcript]
* NCR Atleos Corporation 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4839179-ncr-atleos-corporation-2025-q3-results-earnings-call-presentation]
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* Historical earnings data for NCR Atleos [https://seekingalpha.com/symbol/NATL/earnings]