Earnings Call Transcript - NATL Q1 2024

Operator, Operator

Good day, and welcome to the NCR Atleos Q1 FY '24 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brendan Metrano. Please go ahead.

Brendan Metrano, Host

Good morning, and thank you for joining the NCR Atleos' first quarter earnings call. Joining me on the call today are Tim Oliver, CEO; Paul Campbell, CFO; and Stuart MacKinnon, Chief Operating Officer. Tim will start this morning with an overview of first quarter performance and an update on our objectives for 2024. Next, Paul will review our financial results and outlook, and then we will move to Q&A. Before we get started, let me remind you that our presentation and discussions will include forward-looking statements. 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 a 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. Note that on the website, we have also provided historical financial results on a carve-out accounting basis for 2022 and 2023 to aid in analysis and modeling. 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.

Timothy Oliver, CEO

Thank you, Brendan, and thank you to everyone for joining us on this call this morning. Before I launch into a discussion of a very successful quarter and since I'm hopeful that many of you are newer to the Atleos story, I think it makes sense to reiterate the significant opportunity and focused strategy of Atleos now as an independent pure-play ATM company. Atleos has a service fleet of approximately 600,000 ATMs, 15% of which we own and operate for our own Network business. In the current global environment of steady cash-based consumer transactions and a stable installed base of ATM hardware, our growth will come from generating more revenue for every machine that we support. Whether that's from providing higher quality, more efficient, and more comprehensive services to our financial institution clients or by driving more transaction volume across our Network machines located in blue-chip retail locations, both are fueled by our customers' desire to improve financial access for their customers while outsourcing more of their cash ecosystem. And as we service both from a common infrastructure that is unmatched in scale, is leverageable, and is world-class, our customers are increasingly reinvesting back into their retail banking footprint and embracing shared financial utilities. For them, this strategy will result in lower costs, higher quality, better consumer experience, broader reach, and in some instances, higher foot traffic. For NCR Atleos, it will drive higher revenue growth, higher profitability from a scale and richer revenue mix, and predictable free cash flow. Turning to Slide 5. I'm pleased to report that we are off to a very good start for the year. First quarter financial results were at or above the high end of expectations, led by strong growth in both our transaction base and our services businesses. Profit margins are beginning to climb as we overcome the incremental costs resulting from our spin transaction through cost productivity and interest rates ceasing to increase. The operational and tactical progress of our first quarter allows us to be increasingly confident about our full year 2024. Improving service quality levels, cost productivity traction, key contractual renewals, and sufficient selling pipelines all support our full year guidance. Paul will provide a much more granular view of our performance and our outlook in a few minutes. Moving to Slide 6 that has operating results for our 2 key segments. In our Self-Service Banking segment, we grew our software and services revenue by 7% versus the prior year, catalyzed by our ATM-as-a-Service initiative, which posted almost 40% year-over-year revenue growth and exited this quarter at a run rate of nearly $200 million in annual revenue. Our ATM-as-a-Service active unit count grew modestly in the quarter to approximately 21,000 with increases across geographies. We closed 12 new ATM-as-a-Service deals in Q1, including our first one in Hong Kong, to finish with backlog up from year-end to over 4,000 units. We now support ATM-as-a-Service customers in 12 countries, illustrating the broad appeal of our offering and the significant opportunity for global expansion. More generally, strong ATM orders globally strengthened our backlog and included key competitive wins in cash-intensive growth markets like Mexico, Egypt, and Turkey for the deployment of our new recycling technology and the accompanying services. We will deploy our recycling technology for Egypt National Post. And with agreements with Yapi Kredi Bank and Garanti Bank, we will now implement over 5,000 recyclers in Turkey. Our Network segment performed well in the first quarter with robust transaction growth, including record high transaction volumes in the month of March. Top line trends were positive in most markets, led by Allpoint surcharge-free withdrawals in the U.S. and the addition of ASDA, a premier grocery chain in the U.K. Overall, cash withdrawals grew 11% year-over-year, including 14% growth in surcharge-free withdrawals. Scalable transaction growth against our fixed cost infrastructure and a more profitable transaction mix allowed double-digit profit growth in the Network business. Execution of our transaction expansion strategy continues with deposit transactions at retail locations becoming our fastest-growing transaction type. The first quarter saw the addition of a second large U.S. bank to the deposit network, evidencing the value that all banks can realize from our utility banking network. As part of our strategy to export the success of the Allpoint utility to other regions, we launched the first U.K.-based deposit-accepting locations in partnership with Cash Access UK. Our retail footprint in the U.K. provides ideal locations for banks to send their customers for everyday banking, where branch access may not be as convenient. We continue to strengthen our retail footprint with the extension of our relationships with CVS and 7-Eleven Canada, ensuring safe, convenient access to cash and driving foot traffic for the retailers. FinTech transaction volumes accelerated to new highs as neobanks, which do not have traditional bank infrastructure, provide convenient cash access to their growing customer base. Turning to Slide 7 for an update on our strategic objectives. Last quarter, we outlined our objectives for 2024 and described them in 3 buckets: one, differentiate and grow; two, optimize resource allocation; and three, complete the separation from Voyix. I'll highlight a few accomplishments in each of these 3 for this quarter, starting with differentiate and grow. While I've already described the success of our growth strategies in Q1, we also see future period growth. We continue to drive innovation in the ATM market. We built out our tap transactions in a multi-issuer environment across the U.S. network, enabling faster, more secure transactions, aligning with the fast-growing neobank segment. Our partnership with a leading gig economy payment solution launched across our retail network, providing drivers direct access to their daily pay, further expanding our transaction set. And we activated the first retail deposit locations in the U.K. in a partnership with Cash Access UK and a major U.K. bank, which expanded additional transaction sets internationally. Both our engineering and selling teams are energized by a renewed commitment to deliver innovative solutions and capabilities. Optimizing resource allocation means maximizing output for every unit of input of a scarce resource, whether that be people, cost, or capital. In Q1, we reorganized the customer service and business operations functions. We introduced an AI-driven tool to our Service teams that has already improved both quality and speed. We kicked off multiple productivity initiatives targeting both direct and indirect costs that will help offset separation dis-synergies by the time we exit this year. And we redefined a vendor agreement to allow joint engineering and production efforts that will reduce our costs and, importantly, alleviate supply constraints. And finally, the separation from our former sibling company, NCR Voyix, is on track. During the quarter, we transferred 4 countries back to Atleos that had been stranded with Voyix post-split. Only 3 relatively immaterial countries remain with Voyix, and they're expected to transfer by the third quarter. We also accelerated our efforts to close transition service agreements or TSAs between the 2 companies. Full separation will enable further cost savings for both sides and provide more strategic flexibility. I want to extend my appreciation to the entire NCR Atleos team for delivering a strong quarter through their dedication, hard work, and positive disposition. These efforts and pride of place emanating from our new company are energizing and contagious. We have a lot to do, but the opportunity is compelling, and the future is bright. With that, over to you, Paul.

Paul Campbell, CFO

Thanks, Tim, and thanks to all for joining us today. I echo Tim's comments that we had an excellent start to the year in our first full quarter as an independent company. We were particularly pleased with the financial results, the momentum of our businesses, and the progress on our objectives. Importantly, it further validated the power of our strategy to generate higher revenue and profit per unit across our global installed base of around 600,000 ATMs through adding incremental transaction and service revenue streams. In the discussion of non-GAAP financial results, there are certain instances where year-over-year comparisons are inconsistent. Normalizing these factors would have provided a more favorable comparison, but I prefer not to complicate a good set of results. Where meaningful, I will variably reference those to provide a clearer view on how the business has performed. With that, I'll turn to Slide 9 for a review of the consolidated first quarter results. Total company revenue of $1.05 billion was at the high end of expectations, led by 8% growth in service revenue that reflected our continued success in generating more revenue per unit. Strong service revenue contributed 7% growth in recurring revenue to $763 million, which comprised 73% of total revenue, a new high for the company. First quarter adjusted EBITDA increased 11% year-over-year to $162 million on strong top line growth and 60 basis points of margin expansion to 15.4%. Moving down the P&L, we had interest expense of $79 million or an average total debt balance of $3.1 billion, including approximately $1.7 billion variable rate debt. The weighted average interest rate on debt was approximately 9.4%. First quarter effective tax rate was approximately 27% and the fully diluted average share count was 73.1 million. Putting it together, first quarter diluted adjusted earnings per share was $0.41, just above the high end of the first quarter guidance. We generated approximately $69 million of adjusted free cash flow in the quarter, putting us comfortably on track for our 2024 target of $170 million to $230 million. Moving to Slide 10. Self-Service Banking is our largest business and is comprised of a stable global installed base of approximately 520,000 of our 600,000 ATM units. These 520,000 units primarily generate recurring revenue from software and services attached to hardware units. We are transforming the business by leveraging our network segment infrastructure capabilities to deliver a broader range of services to our customer and a more comprehensive outsourced service model, ATM-as-a-Service. Self-Service Banking had a very solid first quarter with respect to financial results and progress with our strategy. Starting in the upper left, revenue grew 4% year-over-year to $628 million, with recurring revenue up 7% to a new high of 62% of the segment revenues. The recurring revenue growth reflects the success of our strategy to drive more revenue per unit with service revenue up 5% and software revenue up 9% year-over-year. Top line strength was geographically broad-based with growth in all regions other than Asia Pacific, which was slightly down due to the timing of one-time hardware revenue. Adjusted EBITDA was $134 million compared to $139 million in the prior year. Adjusted EBITDA margin of 21% was down 160 basis points year-over-year, primarily due to dis-synergies from the separation, different cost allocation methodology in the prior year, and the shift of certain business functions from corporate to be managed in this segment. Moving to KPIs at the bottom of this slide. For the first quarter, all of our key metrics are heading in the right direction year-over-year and sequentially, indicating our strategy and execution is achieving the desired result of increasing monetization of our installed base. Starting in the bottom left, recurring revenue was up to 62% on the combination of growth in legacy software and services revenue plus incremental ATM-as-a-Service revenue. As Tim noted earlier, we finished the first quarter with almost 21,000 active ATM-as-a-Service units, adding approximately 400 units, which is consistent with the assumption behind our 2024 financial targets. ATM-as-a-Service revenue for the quarter was approximately $46 million, up 37% year-on-year, and our current ATM-as-a-Service unit backlog increased to more than 4,000 units. The backlog and sales funnel mix has a higher mix of deals that would be asset-light, which would not require CapEx funding. Annual recurring revenue in the bottom left increased 8% year-over-year and illustrates the compounding revenue benefit of our strategy to drive more recurring services to our customer base. Moving to Slide 11. The Network segment performed well in the first quarter. Starting at the top left, revenue increased 3% year-over-year, led by 11% growth in withdrawal volumes, more than offsetting the lower-than-expected volumes in our low-margin LibertyX transactions. Withdrawal transactions growth was broad-based with North America up 7% and international up 14%, benefiting from the agreement with ASDA signed in the fourth quarter, which had a full quarter impact on Q1. Moving to the chart on the right. Adjusted EBITDA increased 15% year-over-year to $86 million on top line growth and margin expansion. Adjusted EBITDA margin expanded 270 basis points year-over-year to 28% from a combination of higher growth and more profitable transactions and difference in cost allocation under carve-out accounting in the prior year. Our Network strategy focuses on growing transaction volume on a relatively fixed base of approximately 80,000 of 600,000 ATM units. The key metrics at the bottom of the slide highlights how well this business has been doing that. On the left, you can see that we have continued to optimize the ATM portfolio by reducing low-performing locations, finishing the quarter with 81,000 units. The chart on the right shows the last 12 months average revenue per unit or ARPU, up 8% year-over-year, another proof point in the execution of our strategy to increasingly monetize the existing network of ATMs. Slide 12 presents a summary of our segment revenue and adjusted EBITDA results for the total company. Technology and Telecom segment revenue and adjusted EBITDA margin were slightly up year-over-year due to new customers expanding services in the first quarter. As a reminder, we created another segment and put all of the activity with NCR Voyix into this segment. This segment is largely uncontrollable by us, and as activities between the companies reduce, all of the impact will flow here and will not impact the core business segments. Unallocated corporate costs decreased 18% to $72 million, with primary contributors being the movement of some departments into the business segments and difference between historical cost allocation methodology under carve-out accounting. On Slide 13, we present a walk of adjusted EBITDA to free cash flow for the quarter and a snapshot of our financial position at the end of the first quarter. Starting at the top of the slide, we generated significant free cash flow of $69 million from adjusted EBITDA of $162 million. You can see at the bottom of the slide, the company's financial position strengthened further in the quarter, finishing with a little less than $2.6 billion of net debt and available liquidity of over $700 million. Consistent with our stated capital allocation priorities, more than all of the generated free cash flow was used to pay an approximately $88 million of debt, including $18 million of term loan principal and $62 million of revolving credit facility. We were delighted to reduce our net leverage ratio to below 3.5x, putting us well on our way to our goal of being below 3.2x by the end of 2024 and below 3x during the first half of 2021. Turning to Slide 14, our total company financial outlook for Q2 and full year. I'll start with full year targets, which we have reaffirmed. We continue to expect total company revenues to be in the range of $4.2 billion to $4.4 billion, adjusted EBITDA of $770 million to $800 million, diluted adjusted EPS of $2.90 to $3.20, and free cash flow of $170 million to $230 million. We expect our EBITDA results to sequentially improve throughout the year in line with our normal historical performance. In 2023, conversation was inconsistent with this, influenced by deceleration. For the second quarter, we expect total company revenues to be in the range of $1.06 billion to $1.09 billion, adjusted EBITDA of $180 million to $190 million, and diluted adjusted EPS of $0.63 to $0.73. We expect free cash flow to be $0 to $25 million, down from Q1 due to an increase in expected cash interest payments of $110 million in the second quarter compared to $19 million in the first quarter. Note that free cash flow will not be linear by quarter due to the timing of interest payments. For Q2 2024, interest expense will be $75 million to $80 million, effective tax rate is expected to be approximately 20%, and fully diluted average share count is expected to be approximately 73.5 million. Moving to Slide 15. At the segment level, we expect second quarter Self-Service Banking revenue to be $645 million to $660 million, with adjusted EBITDA margin of 20.5% to 23.5%, Network revenue of $325 million to $335 million, with adjusted EBITDA margin of 28% to 29%. Technology and Telecom revenue of $47 million to $50 million with adjusted EBITDA margin of approximately 20%. Other revenue of $43 million to $45 million with adjusted EBITDA margin in the high single digits. Unallocated corporate costs should be 6.5% to 7% of total company revenue. There's no change in the segment level full year guidance that we shared in our March 26 update. Including my comments on Slide 16, we delivered strong first quarter results across the board, grew revenue, expanded margins, and generated significant free cash flow, which we used to reduce leverage to below 3.5x. We issued Q2 guidance improving sequentially, and we reiterated our full year guidance.

Canyon Hayes, Analyst

You have Canyon Hayes on for Matt Summerville this morning. Maybe we could just talk about the ATM-as-a-Service deployment cadence to hit your annual targets. It looks like it was flat sequentially. I was just curious about the cadence through the rest of the year? And I know we talked about backlog a little bit, but I’d be curious about the funnel unit metrics therein?

Paul Campbell, CFO

Yes, Canyon, this is Paul here. Thank you for your question. That business does not operate on a linear basis. As we mentioned, we have over 4,000 in backlog. This situation is similar to what we faced last year, where we processed over 1,500 in one month while some months were lower. We are still observing strong activity in the funnel, and the backlog remains solid, though there will be some quarters with less volume than others. We are still aligned with our initial expectations, and Q1 was just slightly lighter than what we anticipate for future quarters. Looking ahead, we expect more activity in the second half of the year compared to the first half. We estimate that approximately 30% to 35% of our target will be achieved in the first half, with 65% to 70% in the latter half.

Canyon Hayes, Analyst

Great. Switching over to Voyix. Could we talk about the sustainability of transaction trends? I mean, being in the low double digits to mid-teens. Similarly, I'd be curious to see where ARPU trends from here, and where ongoing net footprint rationalization is going to end up throughout the year?

Stuart MacKinnon, COO

Yes, we are confident in the ongoing transactions; it just means there are not more people opting for cash transactions. Cash transactions remain steady and active across all our markets, but our strategy of shifting transactions from the branch to our retail utility network is appealing to both traditional financial institutions and neobanks, which lack infrastructure and depend on us to accommodate their expanding customer base. We are very comfortable with the growth in transactions and believe it will proceed according to the plan we presented on our Investor Day. The expanded transaction types we mentioned, particularly deposit transactions, are our fastest-growing category and yield significantly higher margins for us. This is what drives our growth in average revenue per user.

Paul Campbell, CFO

And then Stuart, regarding the installed base, we believe it will remain largely flat compared to today, which is around 80,000 to 81,000 units.

Keen Fai Tong, Analyst

You mentioned with your ATM-as-a-Service unit, you expect most of the growth to happen in the second half of this year and that some quarters could be lumpy in terms of growth in units. Can you elaborate on the amount of visibility you have in terms of the number of units in any given quarter? And how much you expect the pipeline to ultimately convert to backlog and revenue?

Paul Campbell, CFO

Yes, George. So we talked about having 4,000 in the backlog today. We're working through scaling those rollouts. So they have built rollout at different times based upon the different aspects of those where the ATM to be replaced or where the software stack is. So there are different complexities there. So yes, they'll roll out. And we're expecting the funnel to come in on a more linear basis, and it's down to the timing of the scheduling of the rollout from our side.

Timothy Oliver, CEO

George, this is Tim. This is somewhat of a bifurcated market. We win either very large deals or deals that are relatively small. The typical win for us right now is 250 to 300 machines. There are transactions out there, deals that we bid on that are 3,000 or 4,000 machines. Those move the needle very rapidly and cause in a singular quarter for that number to go up. We will be very careful on those larger transactions that often occur in places where it's more difficult to make, let's call it, a fair return, a good ROI. We may pass on some of those at times in India and other places and favor the deals that are less capital intensive and have a much better ROI in parts of the world like North America and the Crown countries. So those deals are a little bit smaller; they accumulate a little bit slower, but I like the choices that we're making.

Keen Fai Tong, Analyst

That's helpful. And sticking with ATM-as-a-Service, is it normal seasonality for the number of ATM-as-a-Service units to increase faster in the second half of the year? Or can it vary in any given year in terms of the number of units you see in any given quarter?

Timothy Oliver, CEO

In all the 2 years we've been asked this, we haven't seen much of a trend. So I would say this had a lot more to do with the timing of singular transactions and not much to do with seasonality.

Michael O'Brien, Analyst

Congrats on a great quarter. Two quick ones here. One, I just want to quickly confirm that you're still targeting 30,000 ATM-as-a-Service units by the end of the fiscal year? And then my second question is regarding the margin expansion. If you could provide a little bit more color regarding what's driving that? Obviously, transformation costs are coming down. You're targeting reducing stranded costs as well. But then on the flip side, we have some of these ATM-as-a-Service units getting online, which are higher margin as well. So if you can provide a little breakdown of what exactly is driving the margin expansion for the quarter, that would be extremely helpful.

Paul Campbell, CFO

Yes, Michael, we're still on target with our goal of 30,000 units. Everyone in the room agreed with you on that. Regarding margin expansion, was your question about the difference from Q1 to Q2?

Michael O'Brien, Analyst

Yes.

Paul Campbell, CFO

Yes. Okay. Sorry. Yes. So for Q1, Q2, part of it is in the Network space. The transaction volumes; it's a very seasonal business. We do more transactions in Q3 than Q2 and Q2 than Q1. Incremental transactions through the network come through very high margin accretive because effectively the fixed cost is still there. We also have the cost-out initiatives that we kicked off as we separated. They compound as you go through the year. So there'll be a good flow-through from them in Q2, and it'll again increase into Q3 and into Q4. So they're the 2 largest buckets that we have, Michael.

Michael O'Brien, Analyst

Got you. And 1 follow-up on that. Regarding stranded costs, obviously, you're a new public company. Have you guys done a deep dive on stranded cost analysis, and what can be removed to increase margins going forward?

Timothy Oliver, CEO

Yes. We're working our way through the TSAs currently. And when you go through that process, you find that each organization ends up with cost structures that are somewhat larger than you otherwise might have. We've hired some outside help, some folks who do this for a living, who can help us think about what our cost structure should look like once we're finally separate from Voyix. It will be different than it is today. Some areas have to be a little bit more expensive. We need 2 audit firms, so we need 2 legal departments. We need 2 internal audit organizations. But there are a lot of things that can be less expensive. And so we'll work with that outside firm. I don't know that you'll see much return in indirect costs this year, and then we're working really hard at the rent cost productivity currently through the Service organization. But you'll start to see in the third and fourth quarter some reduction in what I'll call overhead costs.

Arun Seshadri, Analyst

Just wanted to understand, I mean, I can see the numbers are really nice and seeing that there's EBITDA growth here. Just wanted to understand within the segment EBITDA, what type of, I guess, when you grow revenue in Self-Service, what sort of EBITDA growth would you expect? What kind of operating leverage would you expect? And I just wanted to understand also as your ATM-as-a-Service units come more online, do you expect to turn adjusted free cash flow to growth kind of in the back half of the year as well?

Paul Campbell, CFO

Yes. Thanks, Arun. Good question. So in Self-Service Banking, the margin flow-through really depends on the revenue type. So if it was incremental upfront hardware sales, you would see somewhere around the 20% margin rate come through. If we're talking about ATM-as-a-Service, the more strategic revenue streams, that generally flows through an incremental around 40 points of margin because we're leveraging existing infrastructure. So it really depends on the revenue streams.

Arun Seshadri, Analyst

Got it. Understood. So as you expect the units to grow, you should return that segment EBITDA to growth as well, as you enter the back half of the year, it sounds like?

Paul Campbell, CFO

We will, Arun, but just to give context, that segment was $46 million in the quarter. So it's still 5% to the company, 10% to the segment. So it will need to get more scalable for it to make a meaningful difference to the total segment margins.

Arun Seshadri, Analyst

Got it. Understood. And then the network revenue, as you said, flows through at a very high margin. That looks like it's 100% margin. Was there anything one-time in Q1 that made it look like the margin growth was actually larger than the revenue growth? Or should we just assume like a very high margin and maybe there were like $1 million or $2 million one-timers?

Paul Campbell, CFO

Yes. There are no one-timers as such. There's a little bit of noise in our prior year accounting with it being on a carve-out basis. Some of the allocation methodologies were slightly different. So it was a very strong quarter for the Network segment. We're really pleased with the margins. But we wouldn't expect to flow through 100% margins. So a little bit of funniness in the comparison, but a really good quarter performance for the Network segment margins.

Arun Seshadri, Analyst

Got it. Great. I wanted to follow up on the adjusted free cash flow. While we saw nice EBITDA growth, adjusted free cash flow was about flat for the quarter. Is there anything one-time there? Do you expect to grow adjusted free cash flow in the second half of the year?

Paul Campbell, CFO

It's difficult to compare the adjusted free cash flow to last year because we had no debt then; all of it was on the parent company. The debt payment in the first quarter was $19 million, which was virtually nothing in the previous year. For the entire year, we are looking at an incremental interest cost of $290 million. Therefore, comparing cash flow to last year isn't very meaningful. However, in our guidance, we indicated a cash flow conversion of 25%, and we are on track to meet that conversion rate in the first half.

Canyon Hayes, Analyst

Just wanted to check in on your thoughts on the dividend in the near term versus deleveraging. Any sort of commentary around there?

Timothy Oliver, CEO

That's a good question. We have been actively discussing the possibility of the company paying a dividend, which we anticipated might happen in the latter half of the year. We are in the process of introducing NCR Atleos to new investors. We mentioned the importance of having a few quarters of performance to ensure we are generating enough free cash flow to return some capital to shareholders. Our goal is to reduce our debt rapidly. As Paul mentioned, we are focused on generating free cash flow. I believe we will have more insights on this by the second quarter. However, I am not convinced that the current valuation supports paying a dividend; a stock repurchase program might be a more appropriate way to return cash to shareholders given the current valuation. We are committed to returning some cash to shareholders once we can confirm that we can generate the level of cash we anticipate. I think in about 90 days, we will have further updates on this matter.

Operator, Operator

There are no other questions at this time.

Timothy Oliver, CEO

Great. I'll wrap up quickly. First, thanks, everyone, for joining today, and thanks to our employee base who really had a terrific quarter. As much as we try to make this look not too terribly complicated, and we talk to you all, I assure you that underneath the covers, this is a very busy place with a lot going on, and we feel very good about the first quarter. I think what you heard today is cash is healthy, ATMs are relevant, and cash-intensive demographics and regions are still cash-intensive. I think you heard we have the most comprehensive, capable offerings for banks and retailers who want to outsource their cash ecosystem. You heard we're innovating; our machines are more capable and they're transacting more often. You heard we are generating more revenue per ATM through transaction volumes and, importantly, picking up more service revenue from our bank customers. And lastly, I'd say we're still undervalued, and we're going to do everything we can to fix that. We're going to reduce our leverage; we're going to perform predictably, and hopefully, we're going to attract some new investors. So thank you very much for your time, and we'll talk again in 90 days.

Operator, Operator

This does conclude today's conference call. Thank you for your participation. You may now disconnect.