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NCR chalks up 9% growth; expects US ATM sales to 'circle back' in Q4

US a drag on financial services revenues in Q2; Nuti is confident they'll 'circle back' in Q4.

August 1, 2013 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

"The team is doing an excellent job of delivering good execution on an aggressive plan vis-à-vis our vision for the future of this company, and I want to congratulate the team on that."

With that commendation, NCR Corp. chairman, CEO, president, and executive committee chairman William R. Nuti set an upbeat tone for the company's earnings call after the market bell on Wednesday.

NCR reported revenue of $1.54 billion, a 9 percent year-on-year gain for Q2. The company reaffirmed its full year guidance of 9 percent to 11 percent growth year-on-year.

The company's financial services division was down 1 percent year-over-year, dogged by an unfavorable currency exchange of 1 percent and a listless U.S. market. The emerging industries segment declined 5 percent.

However, exceptionally strong results in retail solutions and hospitality more than compensated for the declines, chalking up increases of 26 percent and 22 percent, respectively, over 2012. 

Still, Nuti expressed confidence in a turnaround in financial services fortunes by the end of the year.

"[W]e had a good quarter in financial when you take away the impact of the U.S. market," Nuti said. "I think what obfuscates this quarter is the fact that the U.S. market continues to be under duress and I expect that to be the case until around Q4."

China, India and Brazil recorded strong growth, which helped to offset the soft U.S. market, he said. And the company continues to build share in the financial services software space. 

"The growing contribution of software and services offerings to our revenue mix is delivering profitable growth and margin expansion," Nuti said.

SELECTED HIGHLIGHTS

Financial services

Strategic research and consulting firm RBR identified NCR as the world's largest supplier of multivendor ATM middleware and applications. RBR also reported that FIs in North America and the MEA region rely on the APTRA software suite more often than any other.

Conestoga Bank, an FI serving southeastern Pennsylvania, expanded its interactive video banking program with two additional personal teller machines. 

Wright-Patt Credit Union became the first FI in the greater Dayton, Ohio, region to adopt video teller services.

Cadence Bank, a regional bank serving the Southeast and Texas, announced that it will be the first bank in Birmingham, Ala., to begin using interactive video technology. 

NCR expanded the availability of NCR APTRA multivendor software with certification by Elan Financial Services. Elan's network supports more than 33,000 ATMs for FIs in the U.S.

Dollar Bank elected to replace 60 ATMs with NCR SelfServ with Scalable Deposit Module machines,the only technology in deployment that accepts cash and checks together, in any orientation, through a single slot. Additionally, all Dollar Bank ATMs will run on NCR APTRA Edge multivendor software.

ING Direct deployed NCR's APTR ATM Passport for Mobile, branded as Cheque-In. the solution lets clients take a picture of their check using their mobile device and have it deposited immediately into their ING Direct account. 

ANZ Bank New Zealand will conduct Asia-Pacific's largest deployment of the NCR Cash Recycler 11, which will run on NCR APTRA Cash Connect advanced software to help reduce the risk of accepting and distributing counterfeit banknotes.

NCR installed the first EMV compliant ATM in the U.S. at People's United Bank. The EMV installation includes upgrades to card reader hardware as well as software.

The U.K.'s Nationwide Building Society chose NCR's skimming protection solution, which NCR will deploy on 424 cash machines in the U.K. 

Retail solutions

NCR was named the world's largest supplier of retail self-checkout technology in a new report, "Global EPOS and Self-Checkout 2013," by RBR. According to RBR, NCR is the leader in SCO shipments with a total of 70 percent ship share.

NCR and its Retalix division were named leaders in a Gartner study that assessed retail software companies on CRM capabilities including campaign management, loyalty, in-store CRM, customer analytics and real-time offers. Retalix ranked No. 1 and NCR ranked No. 2.

Suncor Energy selected NCR's Retalix StorePoint point-of-sale and fuel management software for the company's Petro-Canada branded retail network, which has more than 1,500 retail outlets across the country.

Hospitality

NCR and Jamba Juice, in collaboration with PayPal, are working on customized mobile solutions for ordering and payment. The customized mobile ordering solution is designed to integrate with the NCR Aloha POS platform.

LevelUp and NCR announced an agreement in which LevelUp will integrate its mobile payment and loyalty solution into NCR's restaurant POS systems for an easy-to-use digital payment method and seamless diner experience.

Dunkin' Donuts began deploying NCR Vitalcast digital signage at U.S. locations, with approximately 400 Dunkin' Donuts restaurants transitioned to the high-definition menu board technology and 2,000 more expected by year-end.  

Emerging Industries

NCR was ranked by Gartner as the global market share leader in retail industry product support in 2012.

Worldwide, Gartner ranked NCR third in financial services product support revenue and ninth across vertical markets in hardware maintenance and support revenue.

China Southern Airlines added a complete self-service airport check-in solution, NCR TouchPort. Kiosks were deployed at 10 domestic hub airports. NCR will also provide support services to help ensure maximum availability.

Hertz Corporation won the Digital Screenmedia Association's Industry Excellence Award for "Best Travel Deployment" for ExpressRent virtual agent kiosks, designed and deployed with the help of NCR. The kiosks offer live video chat with a remote Hertz agent who walks customers through a transaction.

U.S. growth in Q4?

During the Q&A session at the end of the call, Nuti responded to analysts' questions about his reference to a return to growth in the U.S. in Q4. 

"The return to growth will come from seeing improvement in North America, particularly the U.S. Branch transformation will play a key role ... We're on track to hit the targets we have given you before in that business of around $80 million to $100 million in revenue this year. And I suspect 2014 is a move from, if you will, pilots to production for a number of our customers. And I suspect that in 2014, that business will grow to about $200 million in total revenue right now. Now, it could be a somewhat less than that or more than that ... but again, I'm very encouraged with what I see there going into 2014 and '15."

Nuti also said that Windows 7 upgrades would contribute to a return to growth in the U.S. financial services market, as large numbers of small and medium-sized FIs begin that migration. He said believed it would begin the next cycle of business — following last year's ADA upgrades.

"And so we had a significant growth period from probably Q1 to late Q3 as a result of that. That will begin to circle back with Windows 7 upgrades coming later this year, early next year. And you'll begin to see more of a steady flow of that business in that space. But I think that's more 2014 in terms of revenue realization, not 2013."

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photo: interchangeable parts 

About Suzanne Cluckey

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Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.