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Good day, and welcome to the NCR Atleos Q2 2025 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Melanie Skijus. Please go ahead.

Good morning, and thank you for joining the Atleos Second Quarter 2025 Earnings Call. Joining me on the call today are Tim Oliver, Chief Executive Officer; Andy Wamser, Chief Financial Officer; and Stuart MacKinnon, Chief Operating Officer. During this call, we will reference our second quarter 2025 earnings presentation, which is available on the Investor Relations section of our website at investor.ncratleos.com. Today's presentation will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in today's earnings materials and our periodic filings with the SEC, including our annual report. In our review of results today, we will also refer to certain non-GAAP financial measures. These non-GAAP measures are reconciled to their GAAP counterparts in the presentation materials. A replay of our earnings call will be available later this afternoon and can be accessed through our website. I will now turn the call over to Tim.

Thank you, Melanie, and welcome to the Atleos team. First week on the job with -- right into an earnings release. We appreciate you being here, and we look forward to great things. Thank you to everyone for joining our call this morning. I'll start by quickly reviewing the quarterly operational performance and strategic progress from a more forward-looking and qualitative perspective, I'll leave the quantitative review to Andy. I will then provide some context on the current business environment and its consideration in our outlook. I'll end by reiterating the compelling Atleos story and describing a capital allocation strategy that anticipates steady growth and free cash flow. I'll be back after Andy's review to take your questions. For those following along in the presentation posted to the Investor Relations website, I'll start on Slide 5. In the second quarter, our sixth full quarter as a separate publicly traded company, Atleos reported another solid quarter relative to financial metrics and delivered an exceptional quarter from a strategic and competitive perspective. We grew efficiently by delivering robust hardware revenue that extends our leading installed base and drove incremental revenue from the global service fleet by accelerating our outsourced services business. Our Service First initiative elevated service levels to new all-time highs and is being recognized by our partners and rewarded by our customers. And we embrace simplicity, reducing inefficiencies across the company, optimizing our production and supply chain operations, redesigning the organization to speed decision-making and investing in systems and people to make us easier to do business with. The exceptional effort across the company translated to strong financial results. Revenue was $1.1 billion. Core top line growth was on pace with our plan led typically but not unexpectedly by traditional hardware revenue and the conversion of services growth backlog. This growth was partially offset by lower cardless payroll transactions in the U.S. and by lower T&T segment revenue. Profitability ramped nicely and was at the high end of our expectations due to an advantageous hardware revenue mix, accretive outsourced ATM service revenue growth, fixed cost leverage and direct cost productivity, particularly in our service organization. These were all partially offset by higher cash rental costs and higher tariffs. Considering NCR Atleos solid first half results, we continue to believe our full year 2025 guidance is appropriate. Backlog that supports both multiyear high traditional ATM deliveries and strong ATM outsourced service growth coupled with cost productivity momentum should together be sufficient to offset lower cardless transactions in the Network business and persistently high interest rates that impact our cash rental costs. Shifting to Chart 6, which describes the self-service banking segment. This is primarily a services business comprised of a global installed base of over 500,000 ATMs sold to financial institutions that then run on our subscription software and rely on the Atleos servicing agreement for the duration of their deployment. Traditionally, ATM services have been centered on maintenance and repairs, but increasingly, banks are opting to outsource more or even all of their other services necessarily run in ATM. We now have over 120,000 machines that we support beyond traditional break fix, including over 33,000 that are now fully outsourced to Atleos. Segment financial performance was strong. Revenue grew an impressive 9% in the second quarter, benefiting from increased demand for our recycled product, coupled with acceleration in outsourced services. Services and software grew combined 5%. ATM-as-a-Service was a primary source of services growth and continued to gain momentum with meaningful additions to total contract value to customer count and to backlog. This segment generated significant profit growth with margins up across each hardware, software and services. The higher margin hardware mix and services growth augmented by productivity initiatives contributed to the margin expansion. We also continue to make good progress on our 3 objectives for 2025, which I'll remind you are: grow efficiently, prioritize service and embrace simplicity. From a growth perspective, product innovation efforts are allowing our products to compete exceptionally well. Demand across the product portfolio and especially at the recycled product has exceeded expectations. Accelerating demand in the simultaneous relocation of the preponderance of our manufacturing and assembly to a singular plant has challenged our logistics organization, but their diligent efforts allowed us to make every delivery commitment in the second quarter, and they stand ready for a further ramp in the second half of 2025. While we consider ourselves a services company, growth in our hardware installed base catalyzes future period success. After 8 years running the ship share leader in our collective ATM markets, in 2024, we moved into the first position for installed base and expect to extend that lead in 2025. We will increase the number of machines that we put into service in 2025 by almost 20% over what was a solid year in 2024. Demand for our ATM outsourcing services was also strong and accelerating. We streamlined the sales process and improved conversion rates, resulting in our best quarter ever for ATM-as-a-Service bookings. $177 million of new total contract value, including several orders for enterprise-level customers, and in new geographies, including ING Spain, the State Bank of India and Bank National Canada. Our Service First initiative is working. Already industry-leading service levels continue to trend upward in the second quarter, setting another new high and further enhancing customer satisfaction. Over the first half of the year, customer health scores have increased by 160 basis points. The happier customers are buying more. Our efforts to simplify how we operate are generating positive business outcomes. Following the successful test run of our AI-driven dispatch and service optimization model in Canada, we launched this product for all of North America in the second quarter. These AI tools are delivering improvement across our service performance metrics and are already allowing over 65% of our total dispatches in those regions to be scheduled without intervention. Now turning to Chart 7, summarizing the Network segment. The Network segment is a utility banking business that consists of approximately 80,000 owned and operated ATMs in 13 countries placed in blue-chip retail locations where consumers can meet their regular banking needs. The Network business continues to grow the number of Network cardholders, the number of client financial institutions, the types of transactions resident on the devices and geographies. While second quarter trends for both transaction types and regions increased both year-over-year and sequentially, lower dynamic currency conversion due to less international traveling and lower U.S. prepaid card transactions in cities with large migrant populations resulted in an overall modest decline in segment revenue. We do anticipate both of these be transitory and temporal rather than trends. Adjusted EBITDA margin rate was on budget but decreased year-over-year due to the known expiration of interest rate hedges on our vault cash rental costs that were put in place at the time of the Cardtronics acquisition. Growth opportunities and investments in this segment typically expand the footprint of the network or the transaction capability of the machines in the network. In Q2, we welcomed the return of 7-Eleven locations to our Allpoint network and activated the first 1,000 locations for FCTI for processing. We will also deploy 5,000 Atleos devices backed by our service and support into the 7-Eleven U.S. fleet with the rollout beginning in the fourth quarter. More recently, we announced that we will add convenience retailer Casey's and their 2,900 locations for surcharge-free transactions for our 75 million cardholders at Allpoint, and we added 6,500 ATMs in the Access Cash brand in Canada. Our new transaction types performed well. ReadyCode further expanded its presence in digital payments through an agreement with InComm Payments, providing additional cardless use cases for the ATM. And cash deposit transactions grew 170% for the first half of the year in our U.S. retail portfolio. We continue to build a pipeline of partnerships and integrations to increase transaction opportunities and volumes with a focus on fintech issuers and wallet provider. Flipping to Chart 8, I will use this as a backdrop to restate our strategy and illustrate our unique position. In separating from legacy NCR through a spin transaction in late 2023, Atleos is now a pure-play independent company with a leadership position in Self- Service Banking and a clear growth strategy. In a global environment that continues to demonstrate steady cash-based consumer transactions and a stable installed base of ATM hardware, our growth will come from generating more revenue for every Atleos device that we support. Whether that's been providing high quality and more efficient and more comprehensive services to our financial institution clients, or by driving more transaction volume across our own network machines. Both of these strategies are fueled by our customers' desire to improve financial access for their customers, while also outsourcing more of their cash ecosystem. And NCR Atleos is uniquely positioned to benefit from either solution, a shared financial utility estate or an outsourced bank-specific fleet. Both vectors leverage a common Atleos infrastructure that has unmatched scale and is world-class. And finally, on Chart 9, I summarize our investment thesis. Our separation is done, our TSAs are completed, and we have no new commercial agreements with our former sister company. Nearly 2 years since our launch road show, the key tenets of our value creation strategy remain unchanged. Our strategy and the investment to support that strategy is supremely focused on the ATM and on physical to digital transaction types. Over the past 6 quarters, we have launched our innovation efforts and reclaimed our leadership position, we've expanded our installed base. We've grown our capabilities. We've returned to best-in-class service levels and engaged our global employee base and the Service First culture. We've also improved our balance sheet and are about to cross a critical milestone of being under 3x net leverage. With free cash flow projected to ramp considerably over the next several years, and net leverage expected to drop below 3x in the third quarter of this year, we believe a more balanced approach to capital allocation that favors the highest incremental ROI is now appropriate. To that end, the NCR Atleos Board of Directors has authorized a $200 million share repurchase program with a 2-year duration. On nearly every measure and every multiple, I believe our company remains undervalued relative to our industry and relative to our peers. And as the return of the shares repurchased at these levels is very compelling. We plan to execute on the repurchase program using a 10b5-1 plan, while also driving further reductions in net leverage and pursuing small bolt-on acquisitions that are accretive and reduce net leverage. Before I hand off to Andy, I want to thank our 20,000 employees all over the world for their dedication to our company, dedication to each other, and to our customers. Their Service First bias is driving our success and their unrelenting effort allowed us to deliver yet another strong quarter for the company. We will continue to be innovative to drive impactful outcomes and to lead our industry from the front. The separation transaction is now behind us. Our balance sheet continues to improve, and our outlook is very bright. With that, Andy, over to you.

Thank you, Tim. Building on Tim's comments, the company continued to perform well in the second quarter, making good progress on our plans for the year, advancing our long-term growth strategy and delivering solid financial results. The strong momentum we've built through the first half of the year, coupled with our robust hardware order book and sales pipeline, sets us up well to meet our operating and financial objectives for the year. Importantly, over the past 6 quarters, the company has demonstrated the ability to generate profitable growth and significant free cash flow, which has enabled us to reduce financial net leverage from 3.7x at the time of the split from legacy NCR to approximately 3.1x at the end of the second quarter. Our confidence in the company's ability to continue growing profit and free cash flow in conjunction with good visibility into reaching net leverage of approximately 2.8x as we close out the year supports shifting to a more balanced approach for capital allocation. Given the company's current valuation and significant incremental earnings power, repurchasing our shares offers 1 of the most compelling value-enhancing uses of our capital. So we are pleased to announce that the Board has authorized a $200 million share repurchase program that represents approximately 10% of our current market capitalization. The repurchase authorization has a 2-year term. Moving forward, our goal is to continue to invest in the business and balance share repurchases with further debt reduction at a pace that optimizes sustainable shareholder value creation. Starting on Slide 11, I will focus my comments on core results for the second quarter. Because of the wind down of Voyix-related business impact comparability with the prior year period, note that Voyix-related comps will continue to be less meaningful during the second half of the year. The key message you should take away from this slide is that we delivered solid second quarter financial results, with mid-single-digit core top line and EBITDA growth, margin expansion and high single-digit EPS growth, all within or above the upper end of our outlook. Core revenue of just under $1.1 billion grew 4% year-over-year with 3% growth in our services and software businesses, including acceleration in ATM-as-a-Service growth. Hardware was up 18% year-over-year, in line with our expectations, which drove 3% growth for the first half of the year. We demonstrated continued progress in our services-focused growth strategy with recurring revenue streams accounting for over 70% of total revenue in the quarter. We achieved strong results with high recurring revenue alongside 1 of our best quarters for hardware sales in recent years. Strong growth in our higher margin recurring businesses, coupled with good early progress on productivity initiatives drove 4% growth in adjusted EBITDA to $205 million. The primary source of EBITDA growth was the Self-Service Banking segment, partially offset by a decrease in Network EBITDA, which was expected and a slight increase to corporate costs. Adjusted EBITDA margin of almost 19% expanded approximately 40 basis points from the prior year, with strong margin expansion for Self-Service Banking, more than offsetting margin compression from the Network segment. Below the line, net interest expense decreased $9 million compared to the prior year, benefiting from a lower debt balance, lower variable rates and lower credit spreads achieved in our credit facility refinancing late last year. The other income and expense line improved by $3 million year-over-year. The non-GAAP effective tax rate was approximately 26% for the second quarter compared to 17% in the prior year. Non-GAAP fully diluted earnings per share increased an impressive 9% year-over-year to $0.93. We generated modest free cash flow in the second quarter due to ongoing investment in working capital to support another step-up in hardware deliveries for the third quarter. Turning to Slide 12. The Self-Service Banking segment delivered exceptional financial results in the second quarter. Starting in the upper left, revenue grew 9% year-over-year and reached a new quarterly high of $733 million. The primary factor that drove the top line strength was 21% growth in hardware deliveries, which reflects higher demand related to the industry refresh cycle, uptake of our recently upgraded recycler products and the anticipated shift towards the second quarter for our first half order book. Hardware demand remains robust and should drive another step-up in revenue for the second half of the year. Our services and software businesses continued to generate healthy growth of 5% on a combined basis, with banks increasingly outsourcing more services to us. We estimate that the impact of deferred hardware revenue related to new ATM-as-a-Service agreements was approximately 130 basis point headwind on second quarter revenue growth. Moving to the chart on the top right, SSB grew adjusted EBITDA an impressive 20% in the second quarter to $189 million, also a new quarterly high. The key takeaway here is our ability to drive significant incremental profit through efficient, profitable growth and continuous productivity improvement. Segment adjusted EBITDA margin expanded 240 basis points year-over-year to almost 26% with margins up across each line of business. Tariffs had a gross impact of approximately $5 million in the quarter. Moving to the bottom of the slide, KPIs reflect the healthy fundamentals of the business. On the bottom left of slide, the mix of recurring revenue was 57%, with recurring revenue comprising the majority of the business, even 1 of the strongest hardware quarters in recent years. Normalizing for hardware volumes, we estimate the mix of recurring revenue would have been 60% in Q2. ARR was up year-over-year, reflecting the continued build in recurring services and software revenue from our existing installed base. Next to Slide 13 and our ATM-as-a-Service outsourcing business. As a reminder, our bank outsourcing solutions business resides within our Self-Service Banking segment. Advancing our customers through the continuum of ATM outsourced services towards full outsourcing is a key strategic priority for the company. We break out primary operational metrics separately to help investors better understand and track our progress. As previously mentioned, we will continue to evolve how we discuss the outsourcing business in the coming quarters for better comparability with industry reporting practices. Starting at the top left of the slide, revenue grew 32% year-over-year to $62 million for the second quarter, led by 25% growth in unique customers and a favorable mix shift to [ NMR ], which is our highest margin geography. We also expanded to a new geography in Q2, closing our first deal in Spain. The chart on the right highlights the strong profitability of our ATM outsource services business. With gross profit up 72% year-over-year and gross margin up 900 basis points to 40%, benefiting from faster growth and margin expansion in [ NMR ], our most profitable region. Moving to the bottom of the slide, KPIs also demonstrate the positive trajectory of the business. On the left, ARR continues to build and was up 32% year-over-year to $249 million. We finished the quarter with a strong backlog and sales pipeline that puts us on track with our growth targets for the year. On the right, you can see the healthy revenue uplift we generate from our ATM-as-a-Service business with second quarter ARPU of $8,300. The modest sequential downtick in ARPU for the second quarter was influenced by a higher mix of asset-light customers onboarded in recent quarters. Such fluctuations are expected because the base is still relatively small for variables like region, scope and timing of onboarding can impact ARPU for the quarter. Over the longer term, it should continue to trend upward from growth in higher ARPU regions like North America and Europe. Moving to the Network segment on Slide 14. Second quarter results were at the lower end of our expectations. Segment revenue of $320 million was down 2% year-over-year on a reported basis. Digging into business results, cash withdrawal transactions were approximately 4% lower than the prior year, with mid-single-digit decreases in the U.K. and North America. As Tim noted, North America was impacted by several factors beyond our control, disruption in 1 of ReadyCode's key digital payment partners, coupled with shifts in government policy have affected certain consumer segments. As Tim mentioned, we've seen a decrease in dynamic currency conversion transactions as fewer people are traveling to the United States and also lower utilization of prepaid payment cards given certain government policies. Excluding those items, we estimate North America withdrawals would have grown low to mid-single digits. On a positive note, our ReadyCode solution continues to garner interest from a variety of wallet, fintech and money services providers. Several new participants are in the process of coming live. We expect ReadyCode to return to growth in the coming months as these new partners such as InComm aggregate programs and funnel existing transactions to self-service. Additionally, we've completed certifications for our ATMs in South Africa, and we're seeing strong growth of 13% year-over-year in the region, driven by a mixture of product and operational enhancements. We generated strong top line trends for sources other than withdrawals, helping to diversify the business and support future growth. We continue to see strong momentum across our utility deposit network as deposit volumes were up 170% year-over-year with volumes exceeding $1 billion of annualized deposits for the first time. Moving to the upper right, adjusted EBITDA of $86 million was at the low end of our expectations. The year-over-year decrease in EBITDA was expected and was primarily due to a $12 million increase in vault cash costs resulting from the wind down of previous hedges and macro-related transactional headwinds. Adjusted EBITDA margin was 27% in the quarter. The metrics at the bottom of the slide highlight key elements of our strategy. The chart on the left shows our last 12 months average revenue per unit continues to move higher sequentially and was up 3% year-over-year in the second quarter. On the right, you can see our ATM portfolio finished the quarter at approximately 77,000 units, which is flat sequentially. Looking forward, we expect the number of ATM Network units to increase in 2025 through the addition of both retail partners and geographies. Slide 15 presents a trending product-centric view of our results. This helps visualize how the complementary nature of our businesses creates a company that operates in attractive, growing and highly profitable markets. Most notably, it reinforces that Atleos is primarily a services business that generates recurring streams of revenue and profit. Second, the trend demonstrates that our strategy is working. Our services and software businesses have accelerated coupled with the solid momentum in hardware revenues fueling top line and profit growth. The consistent performance in our transactional business reaffirms the resilience of our business strategy. As a reminder, the other Voyix operations represent legacy NCR Voyix exited geographies and commercial agreements between Atleos and NCR Voyix. We expect business results to continue to decline in these non-core operations. On Slide 16, we present a reconciliation of our second quarter free cash flow and a snapshot of our financial position at quarter end. We generated $15 million of free cash flow for the second quarter, which includes investments in our inventory to support our robust hardware delivery that is scheduled for the third and fourth quarters and is consistent with our outlook for the year. We expect to generate significant free cash flow in each of the remaining quarters as adjusted EBITDA progressively builds in the second half of the year. Net leverage was 3.1x in the second quarter and was down approximately 0.5 turn compared to the prior year. We made $20 million of debt principal payments in the second quarter and finished with $2.9 billion of gross debt. Our unrestricted cash balance was just under $360 million at quarter end and resulted in a net debt balance of $2.5 billion. Based on our financial outlook and capital allocation priorities, we expect net leverage to be below 3x in the third quarter. Moving to Slide 17 for financial outlook. Given our solid second quarter results and positive momentum heading into the third quarter, we've reaffirmed the full year 2025 guidance ranges presented earlier this year. For the third quarter, we expect consolidated core revenue to grow in the mid-single-digit range. The Voyix related impact on top line should diminish further in the third quarter and result in low to mid-single-digit growth for the total company. We expect Self-Service Banking revenue should grow mid- to high single digits, benefiting from approximately 20% year-over-year growth in hardware and positive top line growth for services and software. We expect Network revenue will be flat year-over-year with growth in the core ATM Network business, offset by lower Liberty crypto revenues. Adjusted EBITDA is projected to be between $210 million and $225 million, with margins in the mid-20s for Self-Service Banking, high 20s for Network and high teens for T&T. Below the line, interest expense should be similar to Q2. Effective tax rate is expected to be approximately 25% and share count of approximately 75 million. Putting the pieces together, we expect adjusted EPS to be in the range of $0.95 to $1.10. We expect free cash flow to meaningfully step up in the third quarter. As a reminder, the midpoint of our free cash flow guidance was $280 million, and we expect a 40%, 60% split between quarters 3 and 4. Concluding my comments, Atleos had a successful second quarter and first half of the year and sets us up well to achieve our plan for the year. We delivered solid financial results, had great operational execution and made progress on our key strategic priorities to grow efficiently, prioritize service and embrace simplicity. We have reaffirmed our guidance for 2025 despite continued tariff uncertainty and macro-related transactional headwinds and developed plans to mitigate risks. We move into the second half of 2025 with confidence in our approach and ability to drive profitable growth with our unmatched platform of ATM solutions for our customers, which will ultimately translate to shareholder value. With that, I will turn it back to the operator.

[Operator Instructions] We will take our first question from Matt Summerville with D.A. Davidson.

A couple of questions. Can you talk about with respect to the as-a-service business, what the average ARPU is in the as-a-service backlog and how that's trending. And speaking of backlog, can we put a finer point or some level of quantification on the as-a-service backlog. And then I have a follow-up.

Yes. It's, thanks, Matt, north of $9,000, I think it's $9,100 of ARPU in the backlog, that moves much like, of course, it does in the installed base, right? It depends on the mix that's in there, but it's a very lucrative mix, a little bit of asset light in there, which means that you don't get the pop from the hardware sales that come upfront. But north of $9,000, it's $9,100. And I think we're north of 8,000 units at this point in backlog. So a really good quarter. As I said, it's our best quarter from a bookings perspective since we started this initiative some 2.5 years ago.

Yes. And just to add, I mean, that backlog of 105% up year-over-year. That really does set us up well for the balance of this year and then gives us momentum into '26 as we continue to expand this product offering.

And then in your prepared remarks, Tim, you made the point to talk about some of the achievements you've had in the services side of the organization. Can you put a finer point on that? And any sort of metric quantification. I remember you said 160 basis points, but I don't actually know what metric you're actually using there. And then relative to the stock price and the share buyback announcement, given where you're at, $32, $33, how would you expect Atleos' relative out of the gate aggressiveness to look with repo?

Yes. Let me take the first one. So on a performance perspective, we've got a steady climb back to our leading levels of service performance since the separation, you'll recall that back in October '23 and really through January or February of '24, we found ways to frustrate our customer base. We were taking 2 service organizations that were comprised in many regions by generalists who fixed equipment across both businesses and netting down to single specialist organizations. And we just -- we didn't have people in the right places. Sometimes, we let machines unrepaired. The biggest problem at that point in time was our outlier machine. So on average, our service levels were okay, and probably we're still at the top of the pack. But we had a lot of outliers machines that would sit for days without getting repaired which is a big irritant to our customers. We're well back. The effort was huge by the service organization. We are fully separate now in nearly every region. We supply a little bit of support to Voyix. They don't supply any to us any longer from a service perspective. And we shifted entirely to specialists rather than generalist. We measure an NPS score annually, and then we update that with pulse surveys at the midpoint of the year, at least once a year, those pulse surveys came back incredibly strong. Those pulse surveys, we go out to only those who were detractors in the previous survey and asked 1 question, are we getting better? And the answer in the most recent survey was emphatically, yes. So -- and that's not just on service, right? Those questions go out a lot of different things. You can -- one of the things that most of irritated customers going back a year or so ago was our invoicing capability was we had convoluted invoices. And so we're working on every aspect of customer service. And right now, they're all getting better. On the repo, repos are hard to predict exactly when you're going to do that. Look, I think in the low 30s here. It's a no brainer, we buy back as much stock as we could. Remember, they were only allowed to buy in certain circumstances. We can buy in the uptick. We can only represent a certain percentage of total volume in any given day. And we will operate under a plan. Otherwise, we can only buy in our open windows, which are relatively short, but really only give you, let's call it, 3 months out of the year to be able to repurchase, that wouldn't be effective or efficient. So we'll put a 10b5-1 plan in place. I don't know exactly what that will be structured like now. But it will have -- it will accelerate purchases at lower stock prices, it will allow us to take more advantage of days. We have significant disconnects in our valuation or our performance relative to the rest of the market. We've had several in the last couple of months that on no news, the stock traded, let's call it erratically, and less than elegant trading by others, say, created buying opportunities, we just weren't there to buy. So I want to make sure that we're under 3x levered to before we start. And -- but we'll work with the legal department to get the 10b5-1 plan in place as quickly as possible and start buying back shares. We're very pleased the Board allowed us to get this authorization in place, and we'll use it very wisely. I think $200 million over the next 2 years. If cash flow -- free cash flow plays out the way you think that it will. I don't think we'll need 2 years. I hope that helps.

We will take our next question from Dominick Gabriele with Compass Point.

Really good results and really excited to hear the capital return for sure. I know you've been waiting to get the approval and investors have been waiting to jump in when they see something like this. And so it really seems to me, Tim, that you're moving really beyond the spin now, right? You're shedding your old skin, the business is starting to accelerate in many ways, and you're really starting to transform the business. And so there's a lot of investors, I think, that are going to revisit this name. So if you could just give us kind of your 2- to 3-year vision as you see it today given some of the developments in the quarter and over the last 1 or 2 quarters, I think that would be really excellent. I just have a follow-up, if you don't mind.

Yes. Separation is messy and it's hard. It's a lot harder than I even knew. We have a lot to get done to just get a foundation under us to mature as a company, as a leadership team and to make sure that our customers were comfortable with the new NCR Atleos. We're there. And I think this quarter, the results -- the reported results were great. We lived 90 days at the time as a public company, I get that, but far more important was the huge progress we made competitively. We're winning every work in, and we're winning more than our fair share. And we're winning -- we're getting the benefit of the doubt from our customers, and they're giving us more service revenue. And so I would trade 90-day financial results for the kind of strategic results we just posted every day. And I think that's -- if you hear confidence from Andy and I today, it's because it's working and our customers see it. And the model we put together is 1 that it takes advantage of really the most unique portfolio of capabilities of anybody in our space. No one else can win both ways. If an economy wants to go to a totally shared financial utility called a network of devices like some -- like maybe New

Absolutely. It feels like the leverage target actually jumped the quarter, but was brought forward a little bit to get below 3x too, if I remember right? And so that's really positive. And I guess the only thing I was curious about I think there is a misconception when investors just first look at this company, they [indiscernible] hardware and that's just not the case. And so I think what some people worry about is some of the India impact when you see the tariffs from 25% to 50%. But just remind everybody how small the hardware really is and kind of what those impacts are from the change in tariffs.

Yes. Look, hardware is an $800 million business for us. And we say all the time, we will never distinguish ourselves on hardware. There'll be service that we distinguish ourselves up. That said, and I think I said it in my prepared remarks, that installed base is probably the most powerful thing about our company. And in every period of time that you can extend the installed base and put a device into service that will pay you for the next 5 to 7 years, either by the transaction or by the month, you want to make sure that, that happens. And the reason we're so excited about hardware right now is not because it's pushing revenue growth currently, its because it feels like we're taking share, and it feels like we're growing our installed base, and that's super important to future period success. But it is only $800 million of revenue for us. We've gone out of our way to co-locate all of our manufacturing in India. India is a great market for us. We have over 6,000 employees in India, and we had manufacturing just 4 or 5 years ago in 5 or 6 locations. We have swing capacity in Europe and swing capacity in Mexico that we can utilize if necessary, to manage down tariffs that get out of line. Look, I don't anticipate a 50% tariff in India lasting for the long haul. It won't affect our third quarter because most of our stuff are already on the water, in the fourth quarter would be a modest impact that we had then deal with it. If it stays at 50%, we'll find a different solution. I don't think that it will. And I also think that tariffs won't drive competitive differentiation, meaning all of us procure our parts from other parts of the world. There's very few people stringing wiring harnesses or stuffing printed circuit boards in the United States currently, and I don't anticipate that happening. It's also true that if you subsegment how you're manufacturing too terribly much, you lose scale, you lose scale pretty rapidly. I don't believe there's enough demand for our product inside the U.S. to make it worthwhile to open an assembly plant here in the United States. And even if I did, you'd only save the tariff on the 30% or so of the cost to build associated with the labor content in that device. So we spend a lot of time thinking about this. We have, for many years, thought about the right manufacturing footprint for us that includes cost of use -- supply chain costs as well, localization of supply chain and transportation costs. We will adjust if we have to. I don't know where it's going to go. Nothing is permanent yet. I think that India is an incredible partner for the United States. I think that ultimately, the 2 sides will figure something out. I'm perfectly fine at 25% is still the best place for me to manufacture. I can prove that out. And I'm still competitive. So we'll deal with that when the time comes. For the third quarter, no change. For the fourth quarter, we'll have stuff on the water that gets us through the first month of that fourth quarter. So I'm really not -- this is not a 2025 issue. It will become a 2026 and 2027 issue, and we would act to make sure that we have net effects to offset the gross tariff. I hope that answers your question.

We will take our next question from George Tong with Goldman Sachs.

Your ATM-as-a-Service business saw 32% revenue growth in the quarter from an increase in unique customers and high ARPU geographies. Can you elaborate on how sustainable this growth is and how you expect the growth drivers to evolve over time?

Yes. Great question. I would say, first off, in terms of thinking about the sustainability, I think the first thing to look at is just look at the year-over-year backlog that we had. I mean so it's up 105%. I think as we talk to customers more and more in terms of about our product portfolio and our services offering. I think we are seeing a real validation into this full ATM-as-a-Service portfolio or solution. So as we think about ATM-as-a-Service is up 32% in Q2, we expect that to accelerate further into Q3 and Q4. And certainly above 40%-plus rates for the balance of the year. And when you look at the backlog, it really -- it bodes well in terms of thinking about that continued growth even potentially higher for '26. So I would tell you that every week, we get new, I'll call it, deal reviews in terms of looking at different proposals from customers. And the pipeline in terms of the activity we're looking at, it is robust. So we have a lot -- a high yield confidence in terms of what the outlook is for that growth business for this year and certainly beyond.

Got it. That's helpful. And then do you expect the Network business to see managed units swing back to positive growth on the full year basis. Can you talk about how much of this growth you expect to come from new partners that you signed versus a stabilization of unit declines from existing retail partners?

Yes. I think there's still a little bit of decline in the pharmacy space to go, but it's going to be dwarfed by the new machines that we're adding on. So I feel good about where that number is going. As you know, the ARPU has been growing more quickly than the device declined as we have seen growth in the -- particularly in Allpoint network in the United States for some time, but the most recent deals with 7-Eleven and with Casey's and the addition of devices in Canada, I think, all bode very well for the fleet size. And I also think that some of those new entrants, new partners in the Network business have fleets that actually augment where we are. So it's adding density to places where we needed to add density. Casey's is often in more rural locations. The Canadian devices, I think we have room to increase the density of devices in Canada. So in most urban populations in the United States, we don't need more devices. The access points we're adding now are pretty terrific.

And George, the only thing I'd add is -- and the only other thing I'd add relates to the Network businesses. As we think about Q3, we do see sequential improvement with that business. We think Q2 is really the low point in terms of certainly where we see profitability, we absorbed all the vault cash kit. And so we're now sort of a steady state there. But as I talked about in my comments and Tim's just with the new partners that were going to different transaction types that are being added, we certainly expect sequential improvement in Network, particularly in EBITDA next quarter.

We will take our next question from Antoine Legault with Wedbush Securities.

Just 1 for me in terms of the refresh cycle. Are you seeing anything new in terms of customer demand, given the Windows -- kind of end of life coming up in October. Has there been anything on that front that you can speak to?

Yes. So it will not be that phenomenon that cause people that order more devices this year and next, the devices since the forced migration in 2019 of Windows 10 that we and our banks make sure will never be caught in that situation again. So there's no forced device upgrades caused by the next change in Windows. What you're seeing is a lapping of the huge hardware years that all of us who manufacture devices experienced in 2019, those machines are aging out. They're hitting their 5- to 7-year duration. And so you're seeing some modest uptick in hardware revenue just because of what I call normal refresh cycle, that sign wave is up for sure, and it's -- we're benefiting now. It would not explain, however, all of the upside that we're seeing in the hardware business. I think there's 2 other reasons. One, we're winning more often than in the past. We're winning more than our fair share in most bids and we feel great about that. The other is there is an upgrade associated with the capability of the device. So it's not a forced migration by the underlying software but rather -- or operating system, but rather by the capability of the device, whether it be recycling or multipurpose devices or whether it be the capability of the device around different transaction types and tap and all the rest. You are seeing more demand for more expensive and more capable devices around the world. And we're -- I think you're going to see the look and feel of the device over the next, say, several years, change pretty dramatically as people decide that it's not just about the screen size anymore but rather about how people interact with the machine. So there is definitely demand for hardware that's associated with change, but probably not the change of the operating system.

We will take our next question from Chris Senyek with Wolfe Research.

Solid quarter. Could you talk about the trends you're seeing in ATM-as-a-Service heavy versus asset-light deals? I know there has been a mix change a little bit in some of the past quarters? And then if you could break that out U.S. versus international, that would be super helpful. And then I have a follow-up question.

The asset-light product is primarily a developed world, North America, Western Europe opportunity. the asset-heavy deals more often are in place where the machines cost less and the ARPU per device is somewhat lower. So I think India or Brazil. The mix, as you can see by the ARPU and the backlog is relatively strong from a North American and Europe perspective, which will bode well for a better mix of asset-light deals. It's also true that Andy and his team have finally after many quarters of trying, have found a way to finance some of these devices off of our balance sheet nonrecourse financing, which is really helpful from an asset-light perspective.

Great. And then a question on margins and the cadence of them, given the mix of more hardware stuff in the second quarter. How should we be thinking about the margin cadence in the back half of the year and as we exit 2025?

Yes. So if we think about next quarter, I would say you're probably going to see an uplift in SSB, just continue to grow with as-a- service, even that's going to offset some of the kind of the strong hardware growth. I would expect year-over-year sequential decline -- or actually, sorry, sequential improvement in Network, year-over-year decline just given the vault cash. I would expect T&T to be up modestly and you saw that again in terms of the results we posted in Q2. And then as we think about Q4, we'd expect continued sequential improvement really driven by the same things in terms of continued -- SSB is going to continue to step up as we move throughout the balance of the year, and that's going to drive a lot of the margin.

Yes, this SSB business really is the recipient of most of our productivity initiatives, and those are going very well. Our service organization, we talked about some of the AI tools and other things rolling out. This is a good old-fashioned Six Sigma total quality, however you want to describe it, it's just productivity and those productivity initiatives. I think on a net basis, we're looking to deliver $40 million or $50 million worth this year on a gross business -- gross basis closer to $100 million. Those are on plan and working and they accelerate in the second half of the year. So it also gives us a really good uplift. It is interesting that we're posting improved margins when our mix is more heavily weighted to hardware, that is somewhat counterintuitive to how you perceive our business. But when you get the volumes of devices that we've seen and you get the right mix of devices, it can be at least accretive to what the hardware profitability was in the prior period, and that's what we've seen.

We'll take our next question from Shlomo Rosenbaum with Stifel.

This is James Holmes on for Shlomo Rosenbaum. I just wanted to take a deeper look at ATM-as-a-Service gross margin. It continues to be really strong with margins up 900 bps year-over-year. Is there anything in the backlog that could impact the margins going forward, such as a large deal in India or any other geography? And what can the margins in this segment reach sustainably?

So in my comments, I talked about in terms of the margin profile can change based on the scope, the region and really, frankly, the number of devices. When we think about this, I'll say, the flow-through in terms of revenue being up 32% and the gross profit being up 74%, that margin is really healthy. It's really going to change and sort of evolve, but we expect it to continue to grind higher, particularly with -- as we get more neighbor deals or deals done in North America done. So we're looking at opportunities all around the globe and there frankly are attractive opportunities everywhere. But we expect this margin for a while to continue to go up as we continue to get more productivity, as we launched this product offering globally.

I think what Andy was saying is do not expect 72% profit growth on 39% revenue, correct? Frankly speaking, this is a very advantageous mix. What it does describe is a business that is entirely scalable. And the conversion on those incremental service dollars is exceptionally high. It may not be as exceptionally high as it just was in the quarter just passed, but it will remain exceptionally high. And that's the beauty of this model is that you should see profitability grow well in excess of revenue. And that revenue growth rate, as somebody asked earlier, right, is going to be north of 30% for a long time to come.

And maybe just a quick follow-up. Regarding Network EBITDA margin, what level of interest rates are incorporated into the guidance? And what is the segment sensitivity to any potential interest rate cuts going forward?

Yes. So I would say, if we think about the -- the vault cash will have rates anywhere between SOFR plus 70, 90 basis points when we think about the debt that we borrow. If you want to think about simplistically, about potential rate cuts. So if you had -- you borrow $3.8 billion, if you had a 1 point decrease, in SOFR rate, that's $38 million. So if you had a forward curve, that book, that said, there could be 4 cuts over the next, call it, 1 year, 1.5 years, that will be a benefit towards just pure profitability. So Tim and I can't tell you when the fed's going to cut and what the pace of that cut is going to be. But we certainly think the outlook should be positive in terms of what our vault cash, this should be a low point in terms of where our vault cash cost should be and should certainly improve as we look to the outer years.

Yes. And when we put this plan together, we anticipated 4 rate cuts this year for a full point. And of course, as you know, we've not seen them. So we've absorbed that into our guidance, and we're figuring out how to cover that, but it would be a 1 full point across the year, assuming it was played out across the year would have been half of $38 million or $19 million pickup for us. So we found ways to cover that. But in future periods, when those rates come down, we should see some nice lift in EBITDA.

We will take a follow-up question from Matt Summerville with D.A. Davidson.

I'll be quick here. I just want to make sure I understand within the Network business, can you parse out the impacts of the couple of dynamics you pointed out, ReadyCode being 1 of them that weighed on absolute withdrawal volumes this quarter and when you expect withdrawal volumes to reaccelerate in absolute terms.

Yes, the ReadyCode -- the pause in the ReadyCode growth associated with an acquisition and then resigning an agreement is about $2 million in the quarter. And the -- what was the other, Andy?

DTC and prepaid increased directionally about $2 million to $3 million in aggregate. So that was responsible for an addition to the vault cash.

I think we're concerned with the cardless payments. Some, let's call it, the immigrant intensive economies in blue states is -- we don't -- it got worse at the end of the quarter. And so we don't know where it goes from here. The others -- we suspect that things will adjust, and they always do. But we have to be cautious in our expectations for that, and we're going to find other ways to offset that or in anticipation of that being a little bit more persistent, probably playing out through the third quarter. We'll go find other ways to get back some profitability in that business. But the ReadyCode thing is ready to be fixed and the other, we're watching carefully.

And just the other thing I'd add is -- I said in my comments, we fully expect ReadyCode to ramp over the next few months with partners like InComm. And as Tim mentioned in his comments, just with FCTI and Casey's and others, that business, we have plans to recover.

All other vectors of growth feel great in that business. We just got a modest U.S. unanticipated change in consumption and paying behavior, and we'll have to settle back in. I think we've hit time. I don't want to keep people past if we could help. But operator, thank you for your help today. A quick summary, a great quarter, a good quarter from a reported financial results and KPIs perspective, an exceptional quarter when it comes to our competitive positioning and our strategic progress. We were very pleased to be able to say that our separation transaction is in the rearview mirror as one of you asked, and it does look good to make that statement. It was a longer path perhaps than any of us knew, and we're very glad to be here. The confidence that our Board showed in us to allow us to approve a share repurchase program suggests that they believe, like we do, that we are going to generate strong free cash flows at our company for many quarters and years to come. And that the call on that capital -- this is not a capital-intensive business. The call on that capital will not be high. We'll be able to continue to get it back to both shareholders and debt holders over the next several quarters and years. So thank you very much for your interest. We appreciate your time very much, and we'll talk to you again in 90 days.