NCR Voyix Corp Q3 FY2023 Earnings Call

Good day. And welcome to the NCR Voyix Corporation Third Quarter Fiscal Year 2023 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Michael Nelson, Treasurer and Vice President of Investor Relations. Please go ahead.

Good afternoon. And thank you for joining our third quarter 2023 earnings call. Joining me on the call today are NCR Voyix CEO, David Wilkinson; and CFO, Brian Webb-Walsh. The focus of our discussion on today’s conference call will be on NCR Voyix segment results and key performance indicators for the third quarter 2023. We would appreciate it if you keep your questions focused on the NCR Voyix segment results during Q&A. Please note that our presentation and discussions will include forward-looking statements. These statements reflect our current expectations and beliefs, but they are subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in our earnings release and our periodic filings with the SEC, including our annual report. On today’s call, we will also be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials, the press release dated November 9, 2023, and on the Investor Relations page of our website. A replay of this call will be available later today on our website, ncrvoyix.com. Slides two and three of our earnings presentation provide further details. With that, I would now like to turn the call over to David.

Thank you, Michael. And welcome everyone to our first earnings call as NCR Voyix. Please turn to slide six. This is an exciting time as we begin a new chapter in our journey as a publicly traded company. On October 16th, we successfully completed the separation of NCR Atleos. NCR Voyix common stock began trading on the New York Stock Exchange under the ticker symbol VYX at the market open on October 17th. As we move forward, we are well positioned with an exceptional leadership team and a supportive Board of Directors that comes with extensive industry knowledge and transformational expertise. We are fully prepared to execute our vision as a focused, platform-led software and services company. First, I would like to thank more than 16,000 NCR Voyix employees for their dedication and engagement, particularly over these last few months. Complex transactions like these can often be disruptive, but I am proud of how our employees contributed to the success of this transaction. Not only did they deliver strong third quarter results, but they also maintained a high level of service excellence for our customers. Before we dive into our discussion of the NCR Voyix third quarter results, I’d like to reiterate some of the key messages we outlined in our September Investor Day, particularly around service offerings, competitive advantages, and growth trajectory. Please turn to slide seven. NCR Voyix is a platform-led SaaS and services company that serves three essential industries: Retail, Restaurants, and Banks. For fiscal year 2023, we are on pace to generate nearly $4 billion in annual revenue with approximately half of that from recurring revenues. Software and services comprised about $2.5 billion of our revenue. We operate in a large and growing addressable market valued at a minimum of $25 billion, and we maintain a market leadership position within the segments we serve. This year, we were once again named the number one global provider of point-of-sale software for Retail and Restaurants by RBR. Additionally, we are the number one independent provider of Digital Banking applications. I am proud of the solid profitable foundation for growth that NCR Voyix has built upon. Our deep industry expertise, market-leading technology, and strong customer relationships are instrumental in sustaining our industry-leading position and healthy margins in this space. We serve customers of all sizes, ranging from small and medium-sized businesses to enterprise blue-chip companies that represent some of the world’s leading consumer brands. We have longstanding relationships with our customers who recognize the value our critical applications provide for their businesses. All of our customers face the challenge of differentiating their customers and associates' experiences. This requires modernization of their technology. We have made significant progress over the last few years transitioning from our legacy hardware-only products to our market-leading cloud-based SaaS solutions. This requires shifting our product focus and go-to-market approach, moving from a product-focused approach to becoming a business-critical solution provider to our customers. Our goal is to be the one-stop shop for the technology our customers need to run their businesses. And as a result of these efforts, we have seen our revenue model shift to higher recurring revenue. In the third quarter, our recurring revenues comprised more than half of our portfolio, representing 56% of total revenues, and we are predicting this to grow to approximately 65% by 2027. These are high-margin revenues that are predictable and foster long-term relationships with our customers. Please turn to slide eight. As we think about our near- and long-term opportunities, we have a well-defined strategy focused on three areas: grow, monetize, and expand. Let me provide further details for each area. First, grow. We will capitalize on secular growth trends to expand alongside the market. This includes acquiring new customer logos and converting existing customers from hardware products and one-time software license sales to our platform-based solutions, thereby reinforcing our recurring revenue streams. Next, monetize. We will drive revenue and ARPU expansion by offering additional value-added services to our customer base and capturing a larger share of wallet. Finally, expand. We will expand margins and improve profitability through our high-margin value-added services. In addition, we have also launched productivity initiatives to drive efficiencies across the organization. In a growing market that continues to evolve through this fast-paced environment, we are incredibly excited about the opportunity and runway in front of us. With a strong leadership team that are experts in the industries we serve, we are enthusiastic as we embark on our journey to deliver and create value. Please turn to slide nine. We have a great portfolio of solutions that enable us to deliver platform-based end-to-end technology solutions perfectly tailored to meet our customer’s evolving business needs. For our Retail and Restaurant customers, we deliver modern cloud-based solutions to help simplify their technology infrastructure and effectively run their Restaurants and stores. We lead with our point-of-sale software, which is the heartbeat of the store to create a sticky application for customer loyalty and longevity. From there, we are able to deliver SaaS-based services via our platform, utilizing cloud-native services and open APIs. Our comprehensive technology suite supports transactional, inventory and customer data, as well as pricing and promotions. Similarly, our Digital Banking solutions allow financial institutions to deliver a digital-first differentiated experience. Banks are looking to transform branches to create a simple and convenient method for attracting and onboarding new customers. They want to deliver advanced advisory services and reinvent self-service banking through expanded transaction access and on-demand virtual systems. We are in a unique position to enable banks and credit unions to accelerate their strategies to create an entirely new customer experience, and we are the only provider offering a unified customer experience for both digital and physical channels. There are a few notable third quarter examples that I’d like to highlight. Beginning with our Retail segment, designer brands implemented self-checkout and signed a contract to convert their point-of-sale and self-checkout software to subscription across over 2,000 lanes. This added platform capability to drive valuable store insights from our analytics package. Within our Restaurant segment, our team grew our platform sites by 388 and our payment sites by 517. In SMB, our payment attach rate for new customers remains at approximately 90%, resulting in a 41% increase in payment sites. In the third quarter, Uncle Julio’s, a Tex-Mex chain with 44 sites focused on delivering made-from-scratch culinary experiences, became an Aloha Essentials subscription with Payments customer. This is a perfect example of NCR Voyix helping an emerging chain accelerate its business growth. In enterprise, Papa Murphy’s, who has been a customer of NCR Voyix for nearly 15 years, recommitted to our software with a new three-year Aloha Essentials subscription. Since connecting to our platform, they have been able to alleviate pain points and reduce costs while providing a seamless experience for their customers at more than 1,000 locations. These examples are indicative of the value our customers see in our platform. Turning to our Digital Banking segment, we continue to demonstrate positive momentum. In the third quarter, Digital Banking sales activity was strong with five new customer deals and 21 Digital Banking renewals. We also continued to experience strong cross-sell and upsell momentum, particularly with our channel services platform or CSP and Terafina, our digital account opening platform. We recently hosted the highly successful Accelerate 2023 Digital First Banking Conference in Nashville, Tennessee. With over 900 attendees, including customers, prospects, partners, and industry analysts, the conference generated a powerful impression of NCR Voyix as an innovative, customer-focused and industry thought leader. This was our highest turnout ever, and it was a fantastic opportunity to connect with customers and prospects which garnered great interest in high-value orders. Financial institutions have increased their focus on deposit growth, which is translating into reevaluating their Digital Banking solutions and driving strong demand for NCR Voyix digital-first banking platform solutions. We are making excellent progress accelerating growth in Digital Banking by deepening our existing relationships, signing value-added services, and creating a pipeline of new deals, demonstrating the value our partners see in our solutions. Before I turn the call over to Brian, I’d like to highlight some of our financial results for the combined NCR Voyix segments I just described. Recurring revenue grew 7% in the quarter, reflecting our strategy to shift our portfolio as we focus on our software-as-a-service model. This quarter, recurring revenue accounted for 56% of total segment revenue, representing an increase of more than 340 basis points from the prior year. We also gained operating leverage growing segment adjusted EBITDA by 2% on a constant currency basis and expanding segment adjusted EBITDA margin by 90 basis points compared to the prior year. Now I will turn it over to Brian, who will take you through the details of our segment results.

Thank you, David, and thank you everyone for joining our call today. It’s an exciting time at NCR Voyix. We have certainly accomplished a lot in a short period of time, which is a testament to the talent, dedication, and experience of our employees. As Michael stated at the opening of our call, the focus of my discussion will be on the NCR Voyix segment results. Our growth rates presented are on a constant currency basis for better comparison purposes. Please turn to slide 11. In the third quarter, total segment constant currency revenue was flat compared to the prior year, and on a year-to-date basis, total segment revenue grew 2% compared to the prior year. For Q3, this includes a 3-point headwind from shifting upfront revenue to recurring. These results reflect our strategy to connect our customers to our SaaS-based platform. Software and services growth offset the decline in hardware revenue, which resulted from the post-COVID bump in the prior year. For the third quarter, constant currency segment adjusted EBITDA increased 2% to $249 million, and segment adjusted EBITDA margin expanded 90 basis points to 26.1%. Year-to-date, adjusted EBITDA for the combined segments increased 13% over the prior year, and adjusted EBITDA margin expanded 240 basis points to 24.3%. These improvements to adjusted EBITDA were driven by the mix shift from hardware products to our SaaS-based solutions and services, along with cost initiatives that we implemented to improve efficiency. Please turn to slide 12. As I stated on the previous slide, segment constant currency revenue for the third quarter was flat compared to the prior year. However, recurring revenue increased 7% over the same period. As of the third quarter, recurring revenue for the combined segments represented 56% of total revenue, an improvement of 340 basis points over the prior year. These results reflect our strategy to shift customers to our SaaS-based platform and build our recurring revenue streams. As we have previously discussed, the key tenets of our strategy include retaining our base, upgrading existing customers to the platform, and securing higher margin recurring revenue streams via subscription model. Going forward, we will continue to highlight recurring revenue as we believe this important metric illustrates the ongoing shift in our portfolio and we expect recurring revenues as a percent of total revenue to increase over time. Now let me provide details on each of our segment’s performance, beginning with Retail. Constant currency revenue for the Retail segment declined 2% from the prior year. Recurring revenue increased 3% and represented 47% of Retail revenue in the third quarter, reflecting the shift to our SaaS-based revenue streams. Our Retail portfolio remains healthy and the underlying fundamentals are growing nicely. In the quarter, we more than doubled the number of Retail platform sites compared to the prior year, which is now over 27,000. Annual recurring revenue or ARR, grew 4%. Year-to-date, constant currency revenue for the segment increased 2%, recurring revenue increased 3% over the prior year, and represented 46% of Retail revenue. Constant currency adjusted EBITDA was down 1% compared to the prior year, adjusted EBITDA margin was 23.2%, which represented an expansion of 90 basis points from the prior year. These results were driven by the positive mix shift and the higher margin software and services recurring revenue. Year-to-date adjusted EBITDA grew 21%, and adjusted margin expanded 300 basis points over the prior year to 20.8%. The improvement in adjusted EBITDA for both the quarter and the year reflect a positive mix shift, cost discipline, and normalization of the supply chain. Turning to slide 14. Constant currency revenue for the Restaurant segment was $238 million in the quarter, which was flat compared to the prior year. Recurring revenue grew 12% over the prior year and represented 59% of the total revenue in the quarter. Similar to the Retail segment, Restaurant revenue reflects the shift to our SaaS-based model. Our Restaurant performance in the quarter is supported by growth across the underlying key performance indicators. Compared to the prior year, the number of payment sites grew 41% to more than 6,300 sites, and the number of platform sites grew 7% to nearly 31,000. ARR grew 10% to $560 million. On a year-to-date basis, constant currency revenue grew 1% over the prior year, recurring revenue grew 10% and represented 59% of revenue. Q3 constant currency adjusted EBITDA grew 16% and adjusted EBITDA margin expanded 340 basis points over the prior year to 24.8%. Year-to-date adjusted EBITDA grew 24%, and adjusted EBITDA margin improved 460 basis points over the prior year to 24.7%. Our adjusted EBITDA improvement for both the quarter and the year reflects the mix shift of the Restaurant portfolio, as well as disciplined cost management in the segment. Turning to slide 15. Digital Banking had another strong quarter, having exceeded the Rule of 40. Revenue for the Digital Banking segment grew 7% over the prior year to $147 million, and recurring revenue grew 9%. The strong revenue growth was driven by client wins, strong renewal momentum, and cross-sell success for both Terafina and the channel services platform. We expect growth to continue to accelerate as we exit the year. Compared to the prior year, the number of registered users grew 5% to $28 million, and the number of active users grew 3% to more than 19 million. ARR grew 9% to $520 million. On a year-to-date basis, revenue grew 5% over the prior year and recurring revenue grew 6%. Third quarter adjusted EBITDA declined 3%, and adjusted EBITDA margin declined 430 basis points to 39.5%. On a year-to-date basis, adjusted EBITDA declined 7%, and adjusted EBITDA margin was down 480 basis points from the prior year to 37.8%. Both adjusted EBITDA for the quarter and year-to-date reflect our increased investments in sales and marketing and technology to accelerate growth for this segment. Before we open up the lines for questions, I’d like to highlight that in early Q4, we divested a non-strategic portion of the assets relating to our payments business, consisting primarily of merchant contracts, our front-end authorization platform, and certain IP for cash proceeds of $82 million. Payments remains an important part of our strategy. The divested business generated roughly $40 million in annual revenue and approximately $25 million in annual adjusted EBITDA. Investing in this portion of our business changes the baseline for revenue and adjusted EBITDA we discussed at our Investor Day. However, our view on our go-forward modeling for revenue growth rates and adjusted EBITDA margins remains as previously described. We have a clear strategy for growth in a large growing market where we can take share, our sustainable competitive advantages include our solid financial foundation, a resilient business model, longstanding customer relationships, industry-leading cloud-based solutions, and world-class customer service. This is why we win today and why we will continue to win long term. With that, I will turn the call over to the Operator to begin our question-and-answer session.

Thank you. We will take our first question from Dan Perlin with RBC Capital Markets. Please go ahead. Your line is now open.

Thanks. Good evening and congratulations on the spin. I am sure it was a Herculean task. So David, I just wanted to ask you kind of a broad question initially, which is now post the spin, the conversations you are having with clients across kind of all three of these segments. Maybe you can just kind of bring us up to speed on what those are like, are you finding that during the spend period, there was a little bit of distraction, and now the clients are much more focused, and as a result, they are kind of ready to get back and spend with you? Just any kind of anecdotal information would be great? Thanks.

Sure. Thanks for the question, Dan. Overall, the conversations largely haven’t changed. The teams have remained focused despite the challenges. The effort was substantial, and I appreciate you acknowledging that. The split of NCR into Atleos and Voyix was complex, but our customers are very open and responsive. They recognize our new direction as a software and services company. The progress we've reported, including site growth and platform development, along with successful upselling and cross-selling efforts, is resonating in the market. Clients need the functionality we are offering now more than ever as they seek to consolidate suppliers and find comprehensive solutions. Overall, the conversations throughout this transition have been positive, and our team's service performance has been commendable. Our customers appreciate this new focus and are very receptive.

Yeah. No. I mean, the results seem to suggest that. So thanks for that color. Just a quick follow-up, the payment asset you just divested, I think, you said generated $40 million of revenues. Can you just remind us like what you are keeping, why you decided to get rid of that business, how that impacts in any way the strategy to kind of, of course, and entice new clients to kind of sign up with the payment? And then with getting rid of some of that stuff, what are you replacing it with or using a third-party, anything around that would be great? Thank you.

Payments remain a vital component of our strategy to enhance ARPU through the platform. The assets we divested were payment contracts tied to non-core areas, specifically non-point-of-sale attach payments that do not involve our Retail, Restaurants, or Banking clients. Our focus moving forward is to initiate payments with the point-of-sale software and manage the processing to provide an end-to-end payment solution for our merchants. This has always been our plan, and we do not lose any essential capabilities in the process. We will maintain some capabilities on our front end, continue partnering as needed, and utilize a blend of our own capabilities along with those of our partners to deliver that complete payment experience. We begin with the point-of-sale, which is the foundation for extending value and enhancing payment processing opportunities. While achieving 100% penetration is not required, our strategy remains intact, and this approach allows us to concentrate more effectively on the attach side within our core business.

Got it. Okay. Thank you so much.

We will take our next question from the line of Matt Summerville with D.A. Davison. Please go ahead. Your line is now open.

Thanks. A couple of questions. David, can you talk a little bit about what you are seeing just more broadly speaking from a demand standpoint within the Retail business, specifically comparing and contrasting between SCO and EPOS? And with respect to the former being SCO, I am curious as to whether you guys are seeing more competition from third-party integrators in the space? And then I have a follow-up. Thank you.

Our self-checkout demand remains robust, and we are experiencing growth in market share. According to the last RBR report, we have been the market share leader for 20 consecutive years, maintaining a lead that is twice that of our closest competitor. We believe our data indicates that we will continue to gain share as we expand this year. The market is growing, and the RBR report shows that self-checkout is seeing mid-single-digit growth, which reflects strong demand for our offerings. We are witnessing expansion in several areas, moving beyond grocery into convenience stores, fuel, and specialty markets. A good example of this is our partnership with designer brands, formerly known as DSW shoe company. This demonstrates how self-checkout is evolving beyond traditional grocery settings. Our clients are looking to enhance and define their front-end experiences related to self-checkout, which is becoming a critical focus. We are noticing diverse form factors, and the challenges related to labor are significant, necessitating more labor hours in stores to provide services, while also trying to create flexible front ends. On the consumer side, research indicates that shoppers prefer having options, and they appreciate self-checkout. Despite some negative articles, this doesn’t reflect the broader market sentiment, which is evidenced by continued high adoption in stores where we implement it. Even new clients are achieving over 60% of transactions through self-checkout early in their implementation, which reinforces strong business cases for them. Customer satisfaction is high, and we see our existing clients increasing transaction density. Demand for self-checkout remains strong as we enhance our platform capabilities and incorporate technologies like computer vision and artificial intelligence, along with RFID in our self-checkout systems.

And then the other question I had, David, was on third-party competition from system more of a third-party integrator approach trying to get into the self-checkout market if you are seeing that in your business?

The positive aspect of our platform strategy is that we can adapt to an open ecosystem, whether it's the DIY trend observed with some retailers or through partnerships with major integrators. We collaborate with many of these integrators without seeing them as significant competitors. The competitive environment remains relatively stable, with only a few startups exploring specific technologies, which we welcome. Another advantage of our platform model is that as we transition to software, our true value lies in the intellectual property related to the software and how consumers engage with these devices in stores. This value remains intact regardless of any other parties involved. We believe this approach will benefit everyone, as we connect to the platform and monetize our model, enabling us to profit from these assets as we work with partners or DIY enthusiasts. Therefore, we feel we are positioned well.

And then just as a follow-up on Digital Banking. Can you maybe talk about where you are at year-to-date from a win rate standpoint in that business versus maybe where it was at two years ago and maybe compare and contrast where you are at with your renewals and the success rates you are experiencing now versus in the not too distant past there? Thanks.

Yeah. We are seeing mid-90s in terms of renewal rates across that business; and as we have stated in this release and the previous four quarters, over that time horizon, we won 36 net new customers; we are gaining share in Digital Banking; we are growing registered and active users, and you are starting to see that really convert into the growth that we are seeing, the 9% year-over-year ARR growth that you see is the evidence that would support that growth. There is some timing of some customers that we onboarded. So those customers don’t immediately show up. So a lot of the big wins take a little bit longer to onboard. So as those 36 net new customers start to come onboard, that’s what gives us confidence in the growth rates in that business.

Perfect. Thanks, David.

We will take our next question from the line of Erik Woodring with Morgan Stanley. Please go ahead. Your line is now open.

Hey, guys. Thank you very much for taking my question, and again, congrats on the spend. David, you alluded to some of the hardware declines that is kind of helping to offset the recurring revenue growth. I am just curious, outside of that shift that you are making to the platform lanes and more SaaS-based revenue. Are there any other headwinds to that hardware business that you kind of need to correct or shore up, so to speak? And maybe my question is, outside of the conversion part of your business, kind of how do you change the trajectory of that part of your business that is in decline? And then I have a follow-up. Thanks.

Part of the challenge we’re facing is the average selling price as we introduce new formats. While we are increasing unit volume, particularly with self-checkout, the products tend to be smaller and more like kiosks rather than full appliances typically found in grocery stores that can accept cash. This is leading to some compression in average selling price in that market, which is why revenue growth is lagging behind both unit volume and overall market share growth. Moving forward, we plan to shift our focus towards acquiring new customers, which should help mitigate some of the declines in hardware sales we are observing in our existing base, as customers are holding onto their assets longer. Additionally, our edge technology enables us to deploy software on hardware in a way that extends the lifespan of our products in stores, providing significant value to our clients in the Retail and Restaurant sectors. We believe that by bringing in new customers, we can counteract some of the broader challenges in the hardware market.

Okay. Very clear. Thank you. And then we have heard a lot of positive commentary tonight and so it is really great to see you kind of carrying the momentum after the spin. Just curious if you were to take a bit of like a self-reflecting view of the business and the management team execution. What are any areas where you need to prioritize either improving the product or improving the go-to-market approach or even just improving the overall execution? Where are those holes that you need to patch that can almost supercharge the performance that you are seeing from the rest of your business? And that’s it from me. Thanks.

Thank you for acknowledging the team's outstanding performance. They have truly risen to the occasion and achieved remarkable results. I want to focus on accelerating growth in Digital Banking, where we are beginning to see progress. The EBITDA margin in Digital Banking is slightly down as we are investing in sales momentum and working to reach every financial institution. We have developed an excellent product, evidenced by gaining 36 new customers, and I aim to expedite the process of acquiring new clients. Regarding our hardware segment, our investment strategy is centered on customer retention, enhancing connections to the platform—which we have made significant strides in—and introducing new products to increase average revenue per user. It is also crucial for us to attract new customers and maintain market share. Our focus is not on a dramatic overhaul or addressing numerous product gaps but on improving connections to the platform and expanding our presence across Retail, Restaurants, and Digital Banking.

Very clear. Thank you very much, guys. Good luck.

Thank you. We will now take our next question from Ian Zaffino with Oppenheimer. Please go ahead; your line is open.

Hi, thank you very much. I would like to follow up on the previous question. I'm looking at the Retail platform, which has shown an increase of 118%, which is great. However, regarding the legacy side, could you provide some insight into the extent of the declines you are experiencing? Are the declines accelerating or moderating? Is there anything upcoming that might indicate a moderation, or are we facing this situation until 2027 when growth begins to pick up as you mentioned during your Investor Day? Thank you.

Hey, Ian. The overall number of sites for us is relatively stable in the enterprise sector, with no significant decline. While the legacy hardware business has seen a drop, the overall site count remains flat, which is an area we aim to enhance. We are seeing growth in SMB sites and Digital Banking sites. The conversion of the platform will continue on the trajectory we outlined during our Investor Day. We still maintain our assumptions regarding platform site conversion rates related to our installed base. Regarding the headwinds that Brian mentioned at the Investor Day, we anticipate a 2% impact in 2023 and 2024, but we expect to transition to tailwinds beyond that as we shift toward recurring revenue. We stand by the assumptions we presented during that original Investor Day session.

Okay. Great. And then also, I guess, congratulations on Uncle Julio’s and Papa Murphy’s. For you to kind of look at the slide, I think you put off the case study of the Buffalo Wild Wings, where are you in that or is this on the conversion to platform, are we in the impactful results segment? Where are we and how is it tracking, I guess, versus kind of the magnitude of increases that you laid out in that case study? Thanks.

We discussed our progress during the Investor Day presentation, specifically referencing the Buffalo Wild Wings case study. Currently, we've converted about 20% of our installed base in Restaurant sites and around 10% in Retail. We're on track with these figures and observing positive trends in our average revenue per user metrics. Recently, we've had some significant wins, such as with Uncle Julio’s, and adding payment solutions is contributing significantly to our revenue, which is reflected in the annual recurring revenue growth in the Restaurant segment. Our ARR increased by 10% year-over-year, driven by the conversion to our platform and the addition of payment sites. The outcomes are aligning with what we presented during the Investor Day, and there's no need to alter our expectations.

Okay. So just maybe a quick follow-up on that one. When you mention conversion to SaaS, you are referring to that 39, not that this client would be 3,900, but you are within that 3,900 ARPU range, correct? Have you started to see that 9,000 ARPU level yet or when can we expect to see that?

It varies by client. For instance, during the Investor Day presentation, we shared a pilot example that showed the SMB instance approaching 19,000 when we factor in payments. The results are somewhat influenced by the time spent connected to the platform and the duration we have to upsell and cross-sell, which also relates to addressing specific customer challenges. Our strategy is centered on solving these pain points for customers, allowing them to adopt one or two services that resolve their issues, after which we introduce additional products. The timing of customer groups is significant here. We estimate that as we close the year, we are averaging about 3,600 in ARPU across our customer base, which is consistent with our expectations.

Great. Thank you very much.

There are no further questions at this time. Mr. Wilkinson, I will turn the conference back to you for any additional or closing remarks.

Perfect. Thank you, Operator. Thanks again for joining the call today. And as I said in the opening, the employees of NCR now NCR Voyix and NCR Atleos really did an amazing job to get the spend done and deliver a great quarter. So I appreciate everybody recognizing that. We have a tremendous opportunity in each of our businesses, and we are truly excited about what’s in front of us in the future. And we are operating from a position of strength, and we will continue to build on our strong foundation. We are the market leader, and we have a large base of blue-chip customers with whom we have deep and lasting relationships. We have the critical end-to-end solutions to continue serving these customers to help them run their stores, Restaurants, and branches more effectively, and we are winning in the market and taking share. Across all three segments we serve, our formula for growth is the same. We are going to capitalize on the secular growth trends to win net new customers and gain market share. We are going to connect and onboard existing customers to our platform to drive deeper relationships and capture greater wallet share. When we do all this, it will improve EBITDA margin through the shift in our business, and we will have continued focus on efficiencies and productivity initiatives that will expand margins. And as I mentioned in my opening remarks, our customer’s success is our success, and their growth fuels our growth. So I want to thank all of our customers as well. We strive to deliver consistent world-class experiences to our customers and remain a market leader. We know this is the right formula to drive significant value creation. We are fully committed to delivering results to compound shareholder return. I’d like to thank all the employees of NCR Voyix and NCR Atleos once more, and thank you all for joining.

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