Diebold Q1: 'A large dose of self-help'

Like its competitors, Diebold took a revenue hit from unfavorable foreign exchange rates in Europe. The company also was affected by a currency decline in Brazil, where it has significant business.

Diebold reported total revenue for Q1 of $655.5 million, a decrease of 4.8 percent compared with the prior-year period, or an increase of 1.1 percent in constant currency.

Total revenue growth in constant currency was driven by increased volume in North America, EMEA and Asia Pacific. Due to an expected one-point decrease in constant currency for the remainder of 2015 and political uncertainty in Brazil, the company lowered its earnings-per-share expectations for the year.

Despite these headwinds Mattes was upbeat about the future, based on Q1 indicators. He pointed out that growth in financial self-service was "particularly strong" — up by 6.2 percent, or 12.0 percent in constant currency.

"We've reported growth in every region of the world," he said. "We are growing faster than the market by collaborating with customers to deliver a broader solution set." 

Security also performed well, with revenue growth of 5.3 percent, or 6.2 percent in constant currency, he said.

In the earnings call, Mattes referred to three especially promising developments from the first quarter, namely the acquisition of Phoenix Interactive Design and project agreements in the U.S. with marquee customers, including Walmart.

He said that the acquisition of Phoenix interactive demonstrated tangible progress toward the remaking of Diebold as "a services-led, software-enabled company."

"We are transforming our software portfolio with the acquisition of Phoenix Interactive Design, a highly regarded provider of brand automation software," Mattes said.

"Phoenix will become the foundation of our software business as these solutions deliver the omnichannel experience across all manufacturers' hardware. Adding this IT as well as a highly talented workforce enabled us to pursue a greater share of the total addressable market or TAM. This strategic addition to our company has been very well received by customers and employees alike."

The first-quarter coup with Walmart represents the biggest retail win in Diebold company history, Mattes said. Under the agreement, Walmart stores in North America will be outfitted with Diebold financial self-service technology, including information security solutions, software, managed services and more than 2,000 ATMs. Deployment of the ATMs and related services is underway, with the majority to take place in 2016.

During the earnings call Q&A, Mattes elaborated further on the Walmart project and the example it offers of Diebold's ability to collaborate with customers to create an end-to-end package from consult and design through building and operation. 

"[W]e are replacing a competitive installation there with very innovative solutions as Walmart is going into the financial services space, and we're offering functionality like bill pay or money transfer on our machines ... they approached us and said, 'Listen, we're trying to do this. We're trying to get our arms around the space,' and we were able to satisfy their requirements in a very short period of time."

Diebold also won a multiyear services deal with BBVA Compass to maintain the FI's multivendor ATM fleet in the United States.

"BBVA Compass represents a new logo for us as the bank currently has no Diebold hardware in its ATM fleet," Mattes said.

"This is an important deal for the company as it demonstrates our ability to win new customers by leading with our services capabilities. Our first quarter accomplishment demonstrates that Diebold is winning on two fronts — world class services and collaborative innovation. It is too early to declare victory but we are very encouraged by our progress in the quarter."

cover photo istock