Please stand by. Good day and welcome to the NCR Atleos Third Quarter Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brendan Metrano, Head of Investor Relations. Please go ahead.

Good morning and thank you for joining the NCR Atleos third quarter earnings call. Joining me on the call today are Tim Oliver, our CEO, and Paul Campbell, CFO. Tim will start this morning with an overview of third quarter performance and an update on strategic progress. Paul will follow with a review of financial results and our financial outlook. Then we'll move to Q&A. Before we get started, let me remind you that our presentation and discussions will include forward-looking statements, which are often expressed by words such as may, will, include, expect, and words of similar meaning. These statements reflect our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in today's materials and our periodic filings with the SEC, including our annual report. Also, in our review of results today, we will refer to certain non-GAAP financial measures, which the company uses to measure its performance. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials and on the Investor Relations website. A replay of this call will be available later today on our website, investor.ncratleos.com. With that, I will turn the call over to Tim.

Thank you, Brendan, and thank you to everyone for joining this call this morning. First, a belated happy Veterans, happy Armistice, and happy Remembrance Day to all those who have served their countries. We appreciate you. Now, for those following along in the presentation from the Investor Relations website, I'll start on slide 5. I'm pleased to update you on another very successful quarter for NCR Atleos that saw us make consistent progress against our 2024 objectives and further validate our growth strategies. Strong execution across our businesses and functions in the third quarter translated into third-quarter financial results that exceed planned. We delivered $1.1 billion of revenue, over $200 million of adjusted EBITDA, $0.89 of adjusted EPS, and for the first nine months have generated over $120 million of free cash flow. Our year-to-date performance coupled with the momentum evident in our businesses gives me confidence we will close out a very successful 2024. Reflecting on what was the best quarter to date, and having just celebrated our first birthday as an independent ATM-centric company, I cannot overstate what the Atleos team has accomplished over the past year. One year in, our employees are energized and engaged, our customers recognize a return to best-in-class service levels and appreciate our reinvigorated innovation efforts, our strategic progress is pushing our revenue per ATM higher, and our financial performance has been solid and steady. Before discussing our third-quarter results, I think it's beneficial for those less familiar with our story to provide a quick description of the company and the compelling opportunity we see for all of our constituencies, but with particular focus on our investors. While our employees, customers, partners, and communities have all recognized the compelling outlook for Atleos, the company remains significantly undervalued relative to our peer companies, and our strong performance has not yet translated to gains in enterprise value. After separating from legacy NCR through a SPIN transaction, Atleos is now a pure-play independent company with a leadership position in self-service banking, a clear growth strategy, and an emerging pattern of consistent performance and free cash flow generation. Atleos has an installed and serviced fleet of approximately 600,000 ATMs, including over 80,000 that we own and operate in our own network. 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 Atleos for every machine that we support, whether that's from providing high-quality, more efficient, and more comprehensive services to our financial institution clients, or by driving more transaction volumes across our network machines located in blue-chip retail locations. Both of these strategies are fueled by our customers' desire to improve financial access for their customers while outsourcing more of their cash ecosystem. And importantly, we service both growth vectors from a common infrastructure that is unmatched in scale, is leverageable, and is world-class. As global banks continue to seek to improve their customers' experience in the most cost-effective way, the importance of self-service devices is increasing. As a result, our customers are reinvesting back into their retail banking footprint and embracing shared financial utilities. For them, this strategy will result in lower costs, higher quality, a better consumer experience, broader reach, and in some instances, higher foot traffic. For Atleos, it will drive higher revenue growth, higher profitability from both scale and richer revenue mix, and predictable free cash flow. Through the first three quarters of 2024, we grew service revenue by 6%. We grew ATM as a service revenue by nearly 30%, and increased the ARPU on our network machines by 7%. So, turning to that third quarter, overall financial results were strong again. Revenue was toward the upper end of expectations, and profit was above expectations, led by strong growth in both our transaction base and our services businesses. We again drove solid sequential margin expansion with a beneficial revenue mix, coupled with cost productivity from both direct and indirect costs, as we eliminate the incremental or duplicate costs left by the separation transaction. And importantly, we are on track to deliver significant positive free cash flow in every quarter of 2024. In addition, in October, we successfully refinanced and reworked our credit facilities at lower rates and better availability, based on the company's improved credit profile. Paul will run through the details in a few minutes, but we will see meaningful reductions in interest expense beginning in the fourth quarter. As we close out 2024 and start to think about 2025, our strategy is being validated. Demand for both more capable ATMs, like cash recycling or tap capability, is accelerating in what appears to be the early innings of a hardware replacement cycle. The willingness and desire of banks to outsource non-core ATM servicing to efficient and capable operators is also increasing. And the demand for shared financial utilities that provide immediate and low-cost coverage away from traditional bank branches is growing globally. Moving to Slide 6, self-service banking. Third quarter financial results exceeded the high end of our segment-guided ranges. We grew revenue with strong growth in recurring revenue streams, led by incremental software and services revenues from our installed base of devices. We increased adjusted EBITDA and EBITDA margin rates sequentially with effective direct and indirect cost savings initiatives, coupled with top-line growth and a beneficial business mix. Over the past year, we committed considerable resources to product and service quality and to go-to-market execution to support our strategy. The resulting improvements have been recognized by our customers and contributed to the strategic wins in all regions and businesses and to the high demand and backlog we see in hardware, particularly recyclers. Our ATM as a service solution is progressing well. We grew ATM as a service revenue 23% year-over-year in the quarter to an annual run rate of about $200 million. We continue to see increasing appetite across a broad range of financial institutions to outsource all or a portion of their ATM-centric services to a singular provider. New active customers backlog, and a significant sales pipeline give us line of sight for not only our 2024 objectives, but also present us very well for 2025, and Paul will give you more there. Our backlog continues to grow. The quality of that backlog is very strong, and some org design changes have improved our onboarding speed. As we think about 2025 and beyond for ATM as a service, two things have become clearer. First, our reported metrics define ATM as a service as a singular product that represents the full opportunity for wallet share increase at Atleos. But many of our customers see the opportunity as a continuum of services that they can migrate piecemeal and over time. And our tight definition is causing inaccurate comparisons with competitors who brand any incremental or managed services at the ATM as ATM as a service. Going forward, the important descriptor of strategic success will not be units, but rather ATM as a service revenue and, more broadly, total company services revenue. Second, the strategy does not need to be capital-intensive. Increasingly, we are signing asset-light wins where ATMs are either already in place or are outright purchased by the customer, allowing us to significantly improve our returns. Moving to Slide 7, the network segment. The network business continued to deliver solid and consistent performance in the third quarter, with revenue and EBITDA up sequentially and in line with our expectations. We are executing a utility banking strategy that is focused on driving incremental transaction volume from our fixed base of approximately 80,000 company-owned and operated ATMs. And we set another new high in revenue per machine, driven by the continued migration of financial transactions from bank branches to our utility banking network. We generated strong transaction volumes in both international markets and North America, fueled by adding new, high-quality banking and retail partnerships, new transaction types, and new functionality to the network. We grew the all-point transactions by 14% year-over-year, as more consumers choose to do their regular banking at our convenient and safe ATM locations without paying a surcharge. Deposit volumes grew 200% year-over-year, as the uptake continues to ramp with key financial institution partners in the U.S., including Capital One, PNC, and Navy Federal Credit Union. We activated TAP technology on approximately 10,000 all-point machines that have already generated over 1 million transactions in the third quarter. Our other emerging transaction types, like ReadyCode, that enable cardless cash access for gig workers and business deposits through our partnership with Clip Money, also extended very strong growth trends. In international markets, we laid the groundwork for future growth and expansion into Greece and the pre-work for the expansion into Italy. Turning to Slide 8 that reiterates our 2024 key objectives. These objectives describe a path to both operational and strategic success in 2024. I've already discussed many of the highlights for the first three quarters of the year, so I'd like to focus on our objectives for the 2024 homestretch and setting ourselves up for success in 2025, starting with differentiate and grow. Last quarter, I discussed how the strategies of our two reported segments are converging in response to our bank customers adapting their retail business models to meet evolving consumer and market demand. Conversations with customers have reinforced our view on this trend. We are evolving our go-to-market strategy toward providing solutions that leverage the entirety of our unique, fully vertically integrated capabilities, rather than selling defined product and service steps. Our focus will be on finding the right services that meet customer needs today and establish Atleos as a trusted partner eventually for the full outsourcing of ATMs. Diligent prioritization and application of resources, including people, expense, capital, time, and in some instances, even components, optimizes our returns and catalyzes future period growth. In preparation for our 2025 savings goals, our service organization will shift from initiatives centered around transactions and synergies toward extending our continuous improvement efforts and our AI to roll out. Lastly, the process of separating from NCR Voyix is nearly complete. Most of our mutual TSAs have been completed, a few new commercial agreements have been added to formalize remaining IT-related separation activities, and the outsourcing of all hardware manufacturing by Voyix will truncate our responsibility in that regard and that agreement at year-end. It is very likely that the wind-down of the other category in our segmentation will be nearly complete at year-end and will have no significant impact in reported results going forward. Concluding my comments, I want to express my gratitude to the 20,000 NCR Atleos team members for achieving another impressive quarter, fueled by enthusiastic commitment to our new company's missions and values, diligent effort, and a consistently positive disposition even when under pressure. I am extremely proud of what the global NCR Atleos team has accomplished over the past year, and more opportunity awaits this group in 2025. With that, Paul, over to you.

Thank you, Tim, and thank you all for joining us today. We will start on Slide 10 for a review of the consolidated third quarter results. Total company revenue was $1.08 billion, up 4% year-over-year on a constant currency basis, and marked the third consecutive quarter of solid top-line performance this year. Growth was led by recurring software and services revenue, demonstrating our ability to consistently generate incremental recurring revenue streams from an installed base of approximately 600,000 ATMs. Recurring revenue was $790 million in the quarter and comprised 73% of total revenues, reflecting the stability and consistency of our businesses. We delivered third quarter adjusted EBITDA of $207 million and margin of 19.2%. Adjusted EBITDA and margin have expanded sequentially each quarter this year due to the growth in higher margin transactions and services, coupled with the progression of our continuous improvement productivity initiatives, which resulted in a 380 basis points of margin expansion from Q1 to Q3. These benefits more than offset expected separation-related dis-synergies, higher labor costs, and ongoing macro headwinds. Moving to Slide 11, third quarter diluted earnings per share was 89 cents, which was well above our expectations, driven by better-than-expected profits and lower-than-projected tax rate in the quarter. The strong underlying EPS trends through the third quarter and continued momentum of our business exiting Q3 has allowed us to revisit the full year EPS expectations, which we’ll discuss later in the presentation. Moving to the chart on the right, another example of outstanding consistency we have achieved this year, delivering a third quarter of positive adjusted free cash flow with $38 million in the first third quarter. We delivered strong Q3 free cash flow, even with discretionary $50 million working capital use for cash for inventory and accounts payable, which will convert to higher hardware revenue in the fourth quarter. Moving to Slide 12, self-service banking is our largest business and is comprised of a stable global install base of approximately 520,000 of our 600,000 ATM units. These 520,000 units primarily generate recurring revenue from services and software. We are transforming this business by leveraging our network infrastructure capabilities to deliver a broader range of services to our customers and a more comprehensive outsourced services model. Self-service banking had a strong third quarter, exceeding our guidance ranges. Starting in the upper left, revenue grew 3% year-over-year to $677 million. The primary growth drivers were 23% for ATM as a service and strong software revenues, partially offset by hardware revenue deferral associated with the shift to ATM as a service. Recurring revenue was up 8% year-over-year to $414 million. The chart on the top right illustrates the growth trend of our first three quarters of adjusted EBITDA, which reached $167 million, driven by strong growth in high margin software revenue and productivity initiatives. Additionally, adjusted EBITDA margin increased 120 basis points sequentially to 25% in Q3 and up 340 basis points since Q1. As we continue to focus on higher margin services and drive continuous improvements through cost and expense initiatives, the adjusted EBITDA margin trends continue to grow faster than revenue. Moving to the bottom of the slide, KPIs continue a positive trajectory in the third quarter. The mix of recurring revenue was 61% for the third quarter, up approximately 200 basis points year-over-year. The third quarter was the 11th consecutive quarter with year-over-year growth in recurring revenue. Annual recurring revenue was up 7% year-over-year, another proof point at our strategy of driving more recurring revenue from our existing installed basis progressing. Moving to Slide 13, our ATM as a service solution is 100% recurring services, representing only revenue from units fully outsourced to Atleos. These results are included in services within our self-service banking segment. Given the strategic importance of ATM as a service businesses as a key long-term growth opportunity, we want to highlight strategic achievements in the quarter on Slide 13. On the top left of the slide, ATM as a service revenue grew 23% year-over-year to $49 million for the third quarter, which represents strong continued adoption of our ATM as a service. Live customer count increased 46% and we expanded into 10 new markets year-over-year. We are now offering ATM as a service in 34 markets. On the right, gross profit increased 19% year-over-year to $16.1 million and up 12% sequentially, which is consistent with the ramp in ATM as a service revenue. Moving to the bottom of the slide, ATM as a service KPIs also continue to move in the right direction in the third quarter. On the bottom left, annual recurring revenue continued a consistent upward trend in the third quarter growing 23% year-over-year to almost $200 million. On the bottom right, the last 12 months average revenue per unit or ARPU continued to build during the third quarter and reached 8,500 per unit up from 8,000 the previous year. The increase in ARPU is largely the result of adding customers in higher yield regions to the base of units. It is important to keep in mind that there were a lot of variability in ARPU between geography, the product type, the set of services included and the institution size. Our focus is to expand the services that we perform for our customers to maximize revenue growth and margin expansion rather than target a singular measure of number of units fully outsourced to us. That said, this is a KPI that we have referenced and expect to exit this year with approximately 28,000 units live and have a signed backlog of approximately 8,000 units that would roll out in 2025. Demand for ATM as a Service is broad-based across all regions and particularly healthy in North America which we expect to become an increasing mix of our ATM as a service unit installed base. Our dialogue with customers causes us to increasingly believe that the majority of financial institutions will continue to outsource more of their ATM fleet operations and will move to a full outsourced model at some point. Moving to the network segment on Slide 14, our network utility banking strategy focuses on offering financial institutions and retail partners access to the industry-leading scale of our owned and operated ATM network. We are progressively increasing the types of transactions and number of users of our approximately 80,000 unit base of ATMs driving a higher revenue per unit. The network segment had another strong quarter. Starting on the top left, revenue increased 2% sequentially to $332 million. We continue to drive new incremental transactions to our ATM fleet which has driven withdrawal volumes up 9% year-over-year. Withdrawal volumes increased 6% for North America and 11% for international transactions. Also of note, we continue to execute on our nationwide deposit strategy by adding a third U.S. top tier bank to our deposit network. Deposit transactions continue to accelerate growing approximately 218% year-over-year and 50% over Q2, albeit from a small base. We are seeing increasing use cases for our ReadyCode product with volumes increasing 4 times sequentially, again from a small base. On the right, adjusted EBIT of $103 million was also on the high end of our guidance range and increased 2% sequentially. Adjusted EBIT of margin remained strong at 31% reflecting the success of our strategy to drive higher margin transactions through our existing managed units. The key metrics at the bottom of the slide highlight the validity and execution of our strategy. On the left shows the last 12 months average revenue per unit was up 7% year-over-year in the third quarter. On the right, you can see our ATM portfolio finished the quarter at approximately 80,000 units. The slight decrease in unit count is due to pharmacy partners closing low-performing stores which are also our low-volume units. This has a negligible impact on our revenue as customers usually visit our other nearby locations. As discussed earlier, transaction volumes continue to reach all-time highs despite the small reduction in the unit base. We expect the number of units to increase in 2025 through the addition of new clients and geographies. On Slide 15, we provide a trending product-centric view of results to help investors assess and model the company. The key takeaway from this is the progress of maximizing monetization of each ATM unit in our 600,000 unit fleet by attaching more transactions, services, and software. Success in executing this will be evidenced by growth trends in services and software and in transactional product lines. As a reminder, the other segment represents legacy Voyix exited geographies and commercial agreements between Atleos and Voyix. We expect business results to continue to decline in this non-core segment. On Slide 16, we present a breakdown of free cash flow and a snapshot of our financial position at the end of the third quarter. The key takeaway in this slide is that we generated $38 million of free cash flow for the third quarter and year-to-date of approximately $123 million. To support higher hardware revenue expected in the fourth quarter with the use of cash on inventory and accounts payable for inventory and transit at the end of Q3. This will be a source of cash in the fourth quarter. On the bottom of the slide, year-to-date, our net debt is down by $76 million and net leverage ratio dropped from approximately 3.7 to 3.5 times. We have ample liquidity of $689 million at the end of the third quarter. The company's consistent and strong fundamentals and cash flow generation can comfortably support more than our current debt. On Slide 17, we highlight the debt refinancing transaction that we executed in October 2024 that will translate to meaningful interest savings and incremental free cash flow in 2025. Based on our strong and consistent financial performance over the past year, lenders and credit investors acknowledged our improved credit profile and were very cooperative in refinancing our credit facilities at lower rates. This also allows us to raise an additional $300 million of Term Loan A to pay down a more expensive Term Loan B. In addition, we approved our liquidity position by adding $100 million to our revolving credit facility capacity, which we have not used and view as dry powder. At the current level of indebtedness, these changes reduced the weighted average spread to SOFR by approximately 1 percentage point for an estimated annual savings of approximately $17 million. Turning to Slide 18 and our total company financial outlook for the full year 2024, we now expect fully diluted non-GAAP earnings per share to be approximately $3.12, up from the previous guided range midpoint of $3.05. For revenue, adjusted EBITDA, and adjusted free cash flow, we affirm our guidance at the midpoint of the previous guidance ranges. Concluding my comments on Slide 19, we've delivered our third consecutive quarter at or above guidance, demonstrated a proven track record, and set the stage for a successful full year. We made great progress in our operational cost-saving initiatives, and we emphasized our strategic objectives with growth in transactional, software, and services revenue. We raised our full-year non-GAAP EPS guidance and reaffirmed revenue and adjusted EBITDA.

Thank you. The first question is from Matt Summerville with D.A. Davidson.

Thanks. A couple of questions. Given some of the tailwinds that you have when I think about free cash flow, lower cash interest expense, and ATM as a service business that is increasingly asset-light relative to maybe expectations you had set a year ago, how should we be thinking about the company's free cash profile, ability to free cash flow conversion, if you will, in 2025, realizing you probably don't want to get full guidance, but maybe just a soft look, if you will, at the free cash flow profile next year? And then I have a follow-up.

Yeah, thanks, Matt. Your analysis is exactly right. And it is a little early for 2025. We're grinding out here to close to 2024. We've started our planning process for ‘25. I think the way to think about 2025, if we walk all the way down to free cash flow, would be another year not so different from this one. Right. We generated about 3% to 4% growth in our core business this year and expect the very same thing next year. We grew profitability more quickly than that. I think you should expect more than double that in terms of growth rate in EBITDA next year, something like 8% to 10% growth in EBITDA. And then a much higher conversion rate in EBITDA to free cash flow for the reasons you just described. I think if you apply a 35% conversion factor, you’d be close to right, which suggests a much higher free cash flow number in 2025 than a respectable number in 2024, but a much higher number in 2025.

Then along those lines, Tim, how is the board thinking about share repurchases if you're on a firm path, if I'm just doing very quick back-of-the-envelope math in my head? To exit the year at probably 2.7 or so times net levered at a $30 stock price, when can we start to expect Atleos to become more active from a capital deployment standpoint? Thank you.

Just to clarify, I think we're targeting to get to below 3 times around the midpoint of next year. We'll probably exit this year probably around 3.3 times, not 2.7 times. I'll pass it to Tim for the question.

I'm sorry, Paul. I was referring to exiting next year at around 2.7, just doing quick math.

Okay, that's all right.

Yeah. Here's what I'd say. The board is very pleased with our ability to generate cash flow this year, and they're excited about our opportunity to generate even more of it next. The last conversation we had about the deployment of free cash flow, they made very clear to me, and I concur with them, that the reduction of debt and getting it under 3 times levered is the absolute right thing to do. When we get to that point, I think, or let's say, on our way to that point, on our way to being 3 times or less levered, every dollar we de-lever with, I think, is good for both our equity and our debt holders. At that point in time, it would be very fair to have the conversation about returning cash to shareholders. That would be the midpoint of next year. And if you ask me currently, the best way to return cash to shareholders, it's a no-brainer. We're undervalued. We buy our shares back.

Understood. I'll get back to you. Thank you, guys.

Sure.

Hi, good morning. Thank you for taking my questions. Tim, could you talk a little bit about the strong performance in the child service banking in the quarter? Like, where are we in the refresh cycle? Were there any pull-forward in hardware sales? And, you had a lot of positive commentary. It seemed like last quarter we were thinking we're a little bit further into the cycle, but some of the commentary you had now sounded like you think you might be a little bit earlier in the cycle. Maybe you could just talk about that a little bit.

Any refresh cycle that occurs will follow up from the changes we saw in 2019, when our hardware volumes increased significantly, by about 30% to 35% more than we expected or compared to the average trend. We don’t foresee a repeat of that situation. We currently lack those machines, which are aging at about five to seven years, so we will see them replaced over the next few years. This will not happen all at once but gradually. We are noticing larger orders from some of our major bank customers, indicating that they are starting their refresh cycle. As I mentioned earlier, we are likely in the early stages of this process. We experienced a slight increase above expectations for 2024, and I forecast much better hardware revenue ahead. While hardware doesn't make up a significant part of our total revenue, I expect it to contribute to growth next year, which is not usually the case; however, I believe hardware will likely contribute to growth in 2025 and 2026. The majority of our growth this year, especially the portion exceeding our expectations, is driven by service revenue and particularly by strong performance in the network business.

Could you discuss the current situation regarding ATM as a service? You've mentioned that it's more of a continuum rather than a single metric. Looking at the last twelve months' average revenue per user, it has declined sequentially. Is this decline due to a higher proportion of asset-light deals or expansion into lower revenue geographies? It would be helpful to understand what factors are influencing this situation since the initial impression might be concerning with the ARPU decrease, but I understand there is a positive narrative surrounding the asset-light approach.

Yeah, sure. Well, let me take that question if you don't mind. The ARPU is a little bit of an imperfect measure in there because the base is so small. So we're counting the number of ending units and calculating the ARPU. So if we put a unit on the last day of the quarter and it counts as a unit, but there will be virtually no revenue for it. So it takes time to, it's not a full, it's a full quarter of the unit in the denominator, but only the actual revenue period in the numerator. We're expecting the ARPU to increase steadily on a normalized basis because the majority of our backlog is in higher ARPU regions, particularly North America. So we'll expect the ARPU to go up in Q4 and then continue to go up going forward. Just depending, if we deployed a big batch of units at the end of the quarter, then it would have a timing impact on the ARPU just because of the base size.

So year-over-year rolling 12 is a better way to look at that?

Yes.

To that metric, yeah? And we feel great about where the ARPU is headed. If you think about the spread in ARPUs between a machine in India and a full-function machine in the United States, it's dramatically different. It's three or four or five-fold the annual revenue. And so the upward pressure on that metric is terrific. And importantly, as Paul described, we've got a really strong backlog. I think probably 8,000 machines will have a backlog as we enter next year. And the totality of that, that is the backlog as an ARPU that is well above the 8,000. So that should be really helpful.

Yeah, so with this in context, the ARPU in our backlog today is roughly $13,000 or above. So we expect that to increase.

Okay, great. And then just one last one if I could just sneak it in. Is there really any change in competitive dynamics in APAC? Just one of your people noted they're reentering some of the APAC countries over there, including India. Is that some of what might be causing some of the pricing pressure over there? And is that something that you're noticing?

No, so the pricing pressure we've seen isn't so much a hardware pricing pressure as a service pricing pressure. In India, the total life cycle cost of an ATM is much more heavily weighted to the service component than to the hardware component. So it's really the servicing that is putting price pressure. We've not seen any change in pricing behavior by the major players in our space. It's been the same competitors for a very long time. We've always competed really well. We've always had product sets that are relatively robust. And between the three primary players, it's been an 80% share globally, I think, for a long time. And so I don't anticipate any changes there.

Hi, thanks. Good morning. You previously had more longer-term targets for ATM as a service units. And now that you're deemphasizing units more focused on ATM as a service revenue growth, do you have any internal targets to share around ATM as a service revenue, either absolute dollars or mix or growth trajectory?

We will. When we give guidance for 2025, we'll give guidance along revenue first and then described units. Since some of you have modeled that way, we'll help you continue to model that way. But we've not given any guidance on either of those metrics for 2025 yet. The only insight we gave is that our ARPU is increasing. There's a $200 million business currently growing 30% year-to-date, and that we already have 8,000 high-value units in backlog for next year.

Okay, got it. And then can you talk a little bit more about what types of customers are preferring to own their own hardware in an ATM as a service like transaction and why they would not want to outsource their hardware as well?

I think it's pretty apparent to our larger bank customers who own large fleets of machines that their cost of capital is far lower than ours. And for us to build a cost of capital into our pricing to them doesn't make any sense for either of us, and it's more economic and aggregate for folks who already own devices to continue to own devices. More importantly, the machines are already in place, and that's an even better outcome for us. We thought that most of our ATM as a service revenue would be generated by folks who, at the time, they're replacing the machines. We've had success adding ATM as a service to already installed machines, and that's a very good deal for us as well. So it is more likely in some countries or in smaller bank situations to think less than 200 ATMs, but it's more likely they'd prefer for us to put new machines in place and own them. It's a much smaller investment in those for us, and those transactions tend to be, those deals tend to be the most lucrative of the bunch, and so we're happy to do it.

Hi, guys. Good morning. Solid quarter. How should we be thinking about incremental EBITDA margins going forward? You've had some nice margin expansion year to date at the roadshow yesterday. You had some good margin targets out there for 2027. Are the past two quarters indicative of the future, or should we be thinking about it a little bit differently? Thank you.

At the beginning of this year, our legacy NCR business was operating at a margin rate closer to 20%. However, we started the year in the 15% range due to additional costs associated with the separation. Essentially, we were managing two functional and service organizations during this transition. Over the course of the year, you have seen improvements in our margin rate, and for the fourth quarter, we expect it to reach around 20% as we close out the year. It took us a year to return to our initial margin rate, and I am pleased with the progress we have made in addressing those separation costs. Moving forward, we need to enhance our productivity, and Len and his team are focused on fostering a culture of continuous improvement, leveraging AI tools and other resources to increase margins. Our current margin rate is still too low and must be improved to align with a typical service organization. This year, we successfully reduced a significant amount of indirect costs and some direct costs as well. Next year, our focus will heavily be on lowering direct costs, while also making gradual improvements in indirect costs as we streamline our business model, ensuring we operate in areas where we can achieve adequate returns. If we achieve 3% to 4% revenue growth next year and around 8% to 10% EBITDA growth, it likely indicates a further positive expansion in our margin rate for 2025, and there is no reason to think this positive trend won't continue.

Okay, great. And then one more. In terms of recurring revenue mix, I know there's a goal to get to 80% plus over time. Has anything changed in the year that would make you think that you can get there quicker or it's going to take a little bit longer to get that kind of longer-term target?

No, I think we're on track. Most of our growth has come in the recurring revenue space where we're on track to deliver that historical.

There is a follow-up question from Matt Summerville with D.A. Davidson.

Thanks. Two quick additional ones. The ARPU sitting in the as-a-service backlog at roughly $13,000 a unit versus, I think you just reported, $8,500 a unit, that's a big difference.

Yeah.

Help me bridge from sort of point A to point B, if you will, and then where that 13 or I guess where the inbound ARPU will look like from here into that funnel? And then I have a follow-up.

Sure, Matt, I’ll clarify that for you. A significant part of our existing customer base is in India, which was an early adopter of ATM as a service. Consequently, the average revenue per user in India includes a higher proportion of those types of agreements. Additionally, we have a substantial number of asset-light agreements in the UK with companies like Santander. Regarding the average revenue per user in our backlog, we are seeing many new deals, particularly in North America. It's not just about price differences; there's also a variance in product types. A considerable portion of our existing installations consists of cash dispensers, while our backlog includes multifunction units, recycling units, and interactive teller machines. The services offered can greatly vary, so the mix of services affects revenue. We have a comprehensive set of services associated with multifunction units compared to cash dispensers.

Got it. That answer your question, Matt? Yeah. Yeah, you did. Thank you, Paul. As I look at the network business, how should we be thinking about your go-forward cost of cash based on the rate curve and what we've seen from the Fed over the last few months? Thank you.

It's a bit more complex than it seems because it's not solely about the forward rate curve. Due to potential exposure in that area, we utilize derivative swaps to stabilize the interest rate over time. If interest rates decrease by a point, it indirectly impacts our network space, allowing for a smoother adjustment since we implement forward swap contracts to minimize fluctuations. Year-over-year, we expect that the declining cash costs and cost of goods will pose a slight challenge for 2025. However, as we move into 2026 and 2027, it should shift to a supportive factor. Conversely, in terms of debt costs, we see a different scenario. We have refinanced, which will benefit cash flow. As SOFR decreases, that will directly affect the variable part of our debt, which totals around $1.7 billion.

Understood. Thanks, Paul.

Thanks, Matt.

There are no further questions at this time. I will turn the conference back to CEO Tim Oliver for any additional or closing remarks.

Hey, thanks, all. We appreciate all those questions the most we've had thus far, and we're glad to have been able to answer them. We won't talk to you again until the New Year. So firstly, happy holidays, everybody. Stay safe out there and have a great time. We're going to work hard here to close out a successful 2024. We feel good about the momentum we're going to carry into 2025, and we'll be back in 90 days or so to talk to you about that completion of a good first year and, importantly, where we're going from here. So thank you very much, and we'll talk soon.

This concludes today's call. Thank you for your participation. You may now disconnect.