Greetings, welcome to the NCR Voyix Corporation Q4 and Full Year 2023 Earnings Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. I will now turn the conference over to your host, Alan Katz of Investor Relations. You may begin.

Good afternoon, and thank you for joining our fourth quarter and fiscal 2023 earnings conference call. This afternoon, we issued our earnings release reporting preliminary financials for the quarter and year ended December 31, 2023. A copy of the earnings release and the presentation that we will reference during this call are available on the Investor Relations section of our website, which can be found at www.ncrvoyix.com and has been filed with the SEC. Joining me on the call today are David Wilkinson, our CEO; and Brian Webb-Walsh, our CFO. This call is being recorded and webcast on the Investor Relations section of our website. Before we begin, please be advised that remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and other reports filed with the SEC. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call and we undertake no obligation to update them. In addition, we'll be discussing or providing certain non-GAAP financial measures today, which we believe are more reflective of our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this afternoon and our supplemental materials available on the Investor Relations section of our website. As a reminder, you'll see the financials of the NCR Atleos business, which was spun off as an independent publicly traded company on October 16th, 2023 in the discontinued operations line within the P&L. With that, I would like to turn the call over to David.

Thank you, Alan. Welcome, everyone, to our fourth quarter and full year 2023 earnings call. I'll begin by saying that I'm proud of what our team accomplished in 2023 with the spin-off of the ATM business now behind us. We are laser-focused on driving growth from our software and service revenue streams. Our software solutions, which include our platform and physical point-of-sale technology and digital banking products, enable restaurants, retailers, and financial institutions to seamlessly transact and engage with their end-user customers. Before commenting on our performance, I'd like to spend a moment on Slide 4 to remind everyone of NCR Voyix's market-leading position for each of our three segments. These reflect the global reach of our customer base, coupled with our products and services across restaurant, retail, and digital banking. During our call today, I will discuss our strategy to invest in initiatives that support our sales and distribution networks, platform conversions, and technology innovation to drive growth for the company. Turning to Slide 5. We've outlined the key strategic initiatives in place to support our long-term profitable growth. Today, we're a cloud-based platform-enabled software and services company, providing end-to-end digital solutions to our global customer base. Placing customers at the center, we leverage our deep industry expertise and well-established sales and go-to-market engine to drive platform adoption and new customer growth. We will continue to invest in innovation via our commerce and digital banking platforms to deliver best-in-class products and solutions to expand our existing portfolio and drive growth. We continue to focus on expanding our relationship with our customers across all segments—enterprise, mid-market, and SMB—through integrated merchant payment offerings. Turning now to our 2023 performance. For the full year, we delivered revenue and adjusted EBITDA results in line with expectations discussed at our Investor Day in September. Included in that performance, software and services revenue grew 5% on a normalized basis and today represents more than 70% of total company revenue. Brian will provide more details on the financials in his remarks. In 2023, we added approximately 14,000 sites to our platform and signed more than 650 new customers to our growing book of business. Platform traffic and usage continue to increase with the volume of API calls exceeding 100 billion last year, up 35% from 2022. During December 2023 alone, our platform managed nearly 50 million loyalty transactions and 26 million mobile orders online, enabling thousands of restaurants and retailers to meaningfully transact with their end-user customers and operate their businesses. Before I begin my discussion on the segment performance, I'd like to welcome Benny Tadele to the team as President of our restaurant segment. His growth orientation, technical background, global perspective, and customer-centric approach will be instrumental in driving our technology and go-to-market path forward as we look to expand our market share. Now let's turn to the restaurant segment on Slide 6. 2023 was a strong year for our restaurant segment as we signed over 500 new customers. Our platform sites and payment sites increased 8% and 34%, respectively, led by our mid-market portfolio of customers. Let me remind you that our restaurant segment is divided into enterprise, which is defined as businesses with more than 50 locations, and SMB, which we define as organizations with fewer than 50 locations. At NCR Voyix, our SMB division is keenly focused on what we call the mid-market, multi-site operators of 5 to 50 sites and increasingly complex operations. Focusing on 2024 and beyond, a key component of our growth strategy is to better address the mid-market, as these businesses provide the greatest opportunity for growth. Historically, we've benefited from our mid-market customers as they can ultimately grow into enterprise businesses. In the quarter, we had several key customer wins and expansions that I'd like to highlight. One is the signing of a multiyear contract with Nautical Bowls, a rapidly growing acai bowl franchise that fits the profile of a target mid-market business for us. This was a competitive takeaway. Here, we rolled out point-of-sale software via our platform to more than 30 of their locations in Q4 and have continued that rollout into Q1. This customer is leveraging multiple modules delivered via our commerce platform to drive revenue growth and improve efficiency. Within our Enterprise division, we expanded our long-standing relationships with Red Robin to add our kitchen solution across their chain of restaurants. This is a long-standing relationship, and we're now in the process of implementing a multiphase rollout of a comprehensive run-the-restaurant solution within their sites. Our platform solution has continued to gain traction across our target customer base. Our payments-attach strategy for mid-market has resulted in us more than doubling the number of payment sites in our portfolio over the last two years. We will continue to see strong interest in our capabilities, and we're investing to capture share in this segment. Let's move on to our Retail segment on Slide 7. We continue to make significant progress in converting customers to the platform, with platform sites increasing nearly 65% for the year. We signed deals with more than 125 new logos, including both enterprise and mid-market customers in the year and were named the number one point-of-sale software provider within the industry. We remain focused on converting the legacy base of on-prem customers to the commerce platform, which will provide them access to new functionality to run their stores. This will enable us to offer best-in-class SaaS solutions which will extend the longevity of our robust relationships and provide us with greater flexibility to seamlessly deliver new products. An example of upselling additional capabilities to a customer previously converted to the commerce platform, we implemented additional third-party mobile solutions for a large fuel and convenience retailer across their chain of more than 1,000 sites in the United States. The enhanced solution we integrated to our platform enables an extension for card on file and tech wallet within our customers' mobile applications. Further, the integration allows the retailer to offer loyalty promotions to their end consumers, driving increased mobile app and payments usage. We were able to quickly deploy this functionality following our customers' recent conversion to our platform. In addition to conversions, we're also focused on winning new customers. I'd like to highlight a new business win we secured in the quarter with a new brand of an existing enterprise relationship with one of the world's largest e-commerce retailers as they have launched new brick-and-mortar grocery stores over the past few years. This customer chose us to roll out self-checkout as they go live in new stores in the U.S. and the U.K., given our long-standing relationship with one of their other portfolio brands, coupled with our market-leading position in self-checkout. We also signed a new customer in our international business, a large fuel and convenience customer base in Australia. This was a competitive takeaway, and we look forward to serving this customer across their footprint of more than 600 sites. Within the retail industry, we are the clear leader in the enterprise and mid-market spaces. Our focus here continues to be signing on new enterprise and mid-market customers as we also convert our customers to our commerce platform. We have demonstrated success in executing the strategy, and we see a healthy backlog of customers that have committed to moving on to the platform over the next 12 months. Upon their conversion, we will be able to drive additional value for these customers through cross-selling and upselling value-added modules and other services. Turning to Slide 8. We included this slide to illustrate a brief overview of capabilities and functionalities enabled by our cloud-based commerce platform, which supports both our retail and restaurant customers, giving us the benefit of operating synergies when delivering common solutions. NCR Voyix has invested in building a robust platform that can deliver leading solutions to all customers. Our shift to the platform will also enable us to move away from maintaining legacy on-prem applications, which have limited functionality and are becoming increasingly cost-inefficient for the customer. Before I begin my discussion of our digital banking performance on Slide 9, I'd like to welcome Brendan Tansill as President of the Digital Banking segment. Brendan has served as a successful leader in the financial technology industry for more than 10 years and has extensive experience working with financial institutions, both of which align with our digital banking objectives. In the fourth quarter, digital had strong sales activity that included 13 new relationships with financial institutions and 25 renewals. For the full year in 2023, we signed 39 new customers and renewed 76 relationships, which represents approximately 10% of our base. Our registered users grew 4% to more than 28 million, and the number of active users grew 3% to more than 19 million. We are making solid progress accelerating growth for the segment by deepening our existing relationships, selling our value-added services, and creating a pipeline of new deals, which together demonstrate the value our partners see in our solutions. To highlight, we signed a new agreement with Nicolet Bank out of Wisconsin. They selected our platform solution to deepen relationships, attract new customers, and gather new deposits. This, again, was a competitive takeaway from a large legacy player in the space given our capabilities within retail banking. We also continue to experience strong cross-sell and upsell momentum across our multiple platform solutions. One recent example is the Old National Bank, a top 30 bank in the U.S. that renewed its existing contract and added business banking as part of their go-to-market initiatives to attract new profitable customers and retain their best small business relationships. Lastly, we had a competitive takeaway signing Cadence Bank, a leading banking franchise across the South and Southwest who will implement our digital account opening technology. We included Slide 10 to provide a brief overview of our cloud-based digital banking platform, which is separate and distinct from our commerce platform serving our restaurants and retail customers. The capabilities across the platform enable our banking partners to access a wide variety of leading-edge proprietary and third-party solutions for their end users. We have made significant investments in our platform over the last three years to offer end-to-end solutions that have allowed us to win in the marketplace as reflected in our leading digital footprint and the 39 new customer relationships we signed in 2023. As illustrated on the slide, we offer cloud-based platform-enabled digital banking for both consumer and business banking. In addition, we offer add-ons to enable sales and account opening along with transactions and servicing solutions that provide banks and credit unions with a fully integrated consumer experience across the digital and physical channels. These solutions can either be bundled or offered stand-alone while leveraging our cloud-based architecture and our open API toolkit to provide flexibility for third-party integrations. These provide a customized experience for our customers, including access to our existing partner network of more than 200 partners. Before I turn the call over to Brian, I'd like to reiterate how excited I am about the opportunities that lie ahead of NCR Voyix. While the spin provided both the company and NCR Atleos the benefit of operating independently, it was, without question, a huge undertaking that required the entire team's attention. I would like to thank the NCR Voyix team once again for their hard work. With that milestone behind us, we are now acutely focused on the initiatives I've outlined today. I am confident in this team's ability to drive growth and efficiencies across all of our businesses as we continue to invest to support our customers' needs. Now, I will turn it over to Brian, who will take you through the financial results and our outlook for 2024.

Thank you, David, and good afternoon, everyone. I will note that the spin-off of NCR Atleos has created some level of noise in our 2023 reported results due to discontinued operations. Therefore, we are providing normalized growth rates to exclude the impact of certain spin- and divestiture-related items. Some of my commentary will focus on these normalized results. Please turn to Slide 12. Fourth quarter total revenue was $963 million, flat as reported and up 1% on a normalized basis. Full year revenue was $3.83 billion, up 1% as reported and up 2% on a normalized basis. This 2% is consistent with the range we gave at Investor Day. As David highlighted, in addition to total revenue, we will now report a new metric, software and services revenue, which includes software, services, and payments revenue and excludes hardware. We believe this metric is a better indication of the strength and progress of our business. It removes point-of-sale and self-checkout hardware which, although important to providing our customers with a complete solution, fluctuate from period to period depending on refresh cycles and large rollouts. Software and services revenue also generates the vast majority of the company's EBITDA and cash flow. Software and services revenue increased 4% for the fourth quarter and 5% for the full year. For the full year, each of our segments contributed to this growth. Full year hardware revenue was $1.08 billion, down 6%, driven by higher demand in 2022 as a result of COVID and supply chain dynamics. Q4 adjusted EBITDA was $134 million, down 19% as reported and down 24% normalized, largely due to the synergies and prior-year labor benefits. Full year adjusted EBITDA was $618 million, up 4% as reported and up 2% normalized. However, these results contain certain prior-year nonrecurring positive labor items and a $25 million nonrecurring software payment across Q2 and Q3 of 2023. Excluding these items, our year-over-year growth would have been 14 points higher. Full year margin expanded 40 basis points, driven by growth in software and services, coupled with cost initiatives. Normalizing for the spin and divesture-related items, our adjusted EBITDA and adjusted EBITDA margin met our 2023 Investor Day outlook. Please turn to Slide 13, which details our segment results. Q4 restaurants revenue increased 2% compared to the prior year reflecting a 7% increase in software and services revenue. These results were driven by platform and payment sites, service desk ramp and price increases. Full year restaurants revenue increased 3% and software and services revenue increased 10%, largely driven by the same factors that positively impacted Q4. Q4 restaurant adjusted EBITDA increased 22% and margin expanded 360 basis points. Full year restaurants adjusted EBITDA increased 23% and margin improved 350 basis points. Both Q4 and full year results were driven by the positive impact of revenue mix and efficiency initiatives. Q4 retail segment revenue declined 3% as a result of a 1% decline in software and services as well as a decline in hardware. The software and services revenue decline reflects the impact of lower maintenance revenues. Full year retail revenue was flat, which reflects 3% growth in software and services, primarily offset by lower hardware revenue. Software and services growth was driven by platform sites and the $25 million nonrecurring software payment. Q4 retail adjusted EBITDA declined 14% as a result of hardware declines, spending to synergies and prior year labor benefits. Full year retail adjusted EBITDA increased 7% and margin expanded 130 basis points; these results reflect revenue mix, cost initiatives, and the software payment. Q4 digital banking revenue increased 8% and full year digital banking revenue increased 6% as we continue to sign new customers and demonstrate strong cross-sell momentum. Q4 Digital Banking adjusted EBITDA was flat, while margin declined 290 basis points to 37.1%. Full year Digital Banking adjusted EBITDA declined 6% and margin declined 480 basis points to 37.8%. The company made strategic investments in sales and technology throughout the year. Please turn to Slide 14. We ended the year with 3.7x net leverage, $2.6 billion of debt, $263 million of cash, and had $333 million available under our revolver. Leverage at year-end was slightly higher than the Investor Day modeling because of spin and divesture-related items. 89% of our debt is fixed, and our average rate is 5.5%. We do not currently have any significant maturities until 2028. We remain focused on driving cash flow, maintaining a healthy balance sheet, and reducing leverage. Finally, I'd like to outline our 2024 guidance on Slide 15. One note before I start: our 2024 guidance and normalized growth rates do not include revenue and adjusted EBITDA associated with delayed Atleos country transfers. While these delayed countries are not in our guidance, they are currently in our historical financials. Once these transfers are complete, the continuing operations view of the business will be updated to exclude these amounts. Additionally, our 2024 guidance now only includes $20 million of revenue from commercial agreements with Atleos, which is lower than our Investor Day assumption of $50 million. With that, we expect total revenue to be between $3.6 billion and $3.7 billion for the year, down 1.5% at the midpoint on a normalized basis. This reflects lower hardware revenue for the year. We expect software and services revenue to be between $2.7 billion and $2.75 billion, reflecting a normalized growth rate of 2% to 4%. Hardware revenue is expected to decline and range from $900 million to $950 million due to the timing of customer refreshes and major projects. We expect our full year adjusted EBITDA to be between $632 million and $657 million, up 2% on a normalized basis at the midpoint of the range. This includes absorbing $60 million of cumulative synergies. Additionally, the prior year results contained a $25 million nonrecurring software payment that I mentioned earlier. Excluding this item, our year-over-year growth would be 4 points higher at the midpoint of the range. Margin is expected to be between 17.5% and 17.7%, up year-over-year and above the outlook we shared at Investor Day. Our adjusted EBITDA guidance is underpinned by an efficiency program focused on three areas: corporate, hardware, and services. This program is expected to deliver annualized run rate savings of $100 million by the end of the year and more than offset $60 million of cumulative dissynergies in 2024. Many of these actions have already been executed. We expect our full year free cash flow to be between $155 million and $185 million, which includes $250 million of CapEx. Revenue and adjusted EBITDA are expected to improve sequentially through the year, given our expectations for hardware, seasonality, and timing of our efficiency actions. For the first quarter, we expect revenue to decline between 3% and 4% on a normalized basis driven by hardware declines. We expect adjusted EBITDA margin to be relatively flat with normalized Q1 of 2023 and expect to use cash in the first quarter based on our seasonality. Before we move to Q&A, I would like to call your attention to the disclosure in our press release that we filed this afternoon. In early February of this year, the company identified certain ACH debit transactions from one of our bank accounts which were, upon further investigation, fraudulent. While the investigation is still ongoing, we believe the impact of this fraud through year-end was $23 million, all of which was recorded in 2023. Further, we expect to record up to an additional $5 million of expense net of recoveries in Q1 2024 related to ACH transactions that incurred in Q1 before we discovered this issue and disabled ACH debit functionality for this account. The $23 million was reported as a non-GAAP adjustment to adjusted EBITDA in our press release. To the extent possible, we are pursuing direct recovery of the fraudulent disbursements and insurance coverage for this matter. We are filing a 15-day extension for our 10-K and expect to file before the end of the extension period. The 10-K will also include details about two material weaknesses in internal controls over financial reporting that we identified during the investigation, along with our remediation plans.

Our first question comes from Mayank Tandon with Needham & Company.

Dave and Brian, I wanted to start with your key growth metric ARR. Could you talk about how that trended across the various segments in 2023 and your expectations for what it might trend like in 2024, just to get a better gauge on the momentum in the business.

Yes, Mark, this is David. ARR, as you described, is an important metric for us and really reviewing the health of the overall strategy. We saw ARR grow 5% in 2023, that's in total. And we saw digital banking was at 8%, restaurants at 12%, and retail was at 1%. When we look forward into this year, we see that growing across the company at mid- to high single digits with that mid- to high single-digit growth rate across all three of the segments. So that's really a testament to both the platform strategy and our acquisition of customers with payments.

And if I could just ask about competition. So it's been obviously only a few months since the spin. But have you seen a change in your win rates early on in terms of how you're competing with some of the incumbents? Any change in the dynamics in the market that you could call out across your three segments?

I would call out any change due to the spin itself. I think for us, we feel like we're, I'll say, in fighting shape and the ability to get very focused on the segments that we serve. What we've seen is that as we not only sort of serve our enterprise existing customers but then move into mid-market on our focus areas, our differentiators are around the core tech platform and our ability to service those customers end-to-end. As our clients have increasing complexity, we differentiate even further. You will see us continue to grow in the mid-market space. But I don't know that the dynamic has changed as much as we feel more focused on how we're looking for growth from new sites in the mid-market and connecting our existing enterprise customers to the platform for cross-sell and upsell.

Our next question comes from the line of Erik Woodring with Morgan Stanley.

This is Sabrina on for Erik Woodring. Our first one is you had previously talked about the business growing, call it, 1% to 3% in 2024, but now guidance implies that revenue is going to fall, I think, 1% normalized. So what are the drivers of this change in outlook? And more broadly, like what are the macro trends you're hearing from customers right now in terms of propensity to spend on larger CapEx purchases by segment?

Yes. So within the number and being flat to down, the positive aspect of that is the recurring revenue is growing 6% to 7%, and the software and services are growing 3% at the midpoint of the range. So that's the positive, and that's in line with Investor Day expectations, where we're having some volatility as with our hardware demand that we know is lumpy given our large enterprise customers and their projects and refresh schedules. At the time of Investor Day, we believed some of these cyclical projects would be back, and we would typically have visibility to these projects by now, and we're just not seeing it. So we're guiding hardware revenue to be down 12% at the midpoint. If we exclude hardware, we would have been up 1% to 2%, which is in line with Investor Day.

I'll just add, Brian. I think that the hardware expectations we have are in line with what we're seeing in the broader market for hardware demand coming out of the post-COVID rebound from one and a half years to two years ago and then some of the dynamics that we saw in the market last year. So we're seeing that in line with the market.

And then maybe just one more. You talked about wanting to better serve the mid-market in the restaurant segment. I guess, what are the pillars of your strategy? And what are you changing within that segment? And how much of that is baked into your long-term guidance?

Yes, I'll start with the end. It's all baked into our long-term guidance. That's why we feel confident in that guidance. As I described our mid-market definition in restaurants, it's really 5 to 50 sites. So think about a multisite operator that is growing into more sites overall or trying to grow either in a geographic region or across the country. Our approach is payments-led in that space. As we build out additional payment capabilities, you'll see that show up in that space as well. It's really our service differentiation that also adds to what we're building on the tech side of the platform. We'll also simplify our product a little bit in terms of how our customers use it and think about it. The real change is our go-to-market focus; we are going to dose our go-to-market in that space with some additional salespeople.

Our next question comes from the line of Kartik Mehta with Northcoast Research.

Dave and Brian, as you look at the guidance and the outlook for the businesses, obviously, hardware is dragging a lot of revenue growth. But as you look at the digital banking piece, would you anticipate that that will continue to grow as it did in '23? Or is it a little bit more difficult to grow at that rate considering the size of the business now?

Yes. So we anticipate Digital Banking being up 7% this year as we add new customers and continue to cross-sell. And EBITDA margin for that segment, we think will be flat at 38%.

Yes, Kartik. And I would add that as we described in our prepared remarks, we've had 39 net new wins in that space over the last 12 months. We believe that's an undervalued crown jewel within our portfolio. When you look at the overall customer wins that we're seeing, we're taking share in that space, and we have a very competitive product. So we like the growth prospects in that business. Even though we are—it's a large business for us; it's also very profitable, already breaking the mold in this space. We feel really good about that business and the long-term growth prospects.

And then just, Brian, on the cash flow conversion, maybe I'm assuming 2024 obviously had—you're separating from NCR, and there's probably lots of takes ins and outs associated with it. I'm wondering, over the next few years, what you would expect conversion to be.

Yes. Conversion is impacted this year by still some, probably $25 million to $50 million of cash separation costs that are impacting us. We also have some restructuring associated with our cost takeout—so those things are pressuring cash conversion a bit. But as we go forward, those things will come down, and we'll continue to improve margin and generate more cash flow. We have a working capital improvement baked in for this year as well. We think there's an opportunity to continue that in the future years. So we see cash conversion improving in line with what we said at Investor Day as we go forward.

Our next question comes from the line of Dan Perlin with RBC.

It's Matthew Roswell on for Dan. Two questions. I guess, first, when you're looking at the SMB focus and what sort of either product or sales force investments are we thinking about for this year?

Yes. You say SMB. I'll just redirect a little bit to mid-market. We are focused on that 5%, that kind of multi-site operator, both restaurant and retail. The product, we feel is in good shape. We're going to work on process in terms of making it easier for our sellers to quote and onboard those customers with the payments-led offering. On the sales side, if I look at it overall, we're investing about $15 million across the whole company and selling. So when I think about where the growth will come across all three businesses, it will be in that mid-market segment across all three businesses. We're going to make more investments in sales to get more feet on the street. That's where we think the impact will show up.

Okay. And then on the digital banking piece, you had a number of net new wins in the quarter in the year. I was wondering, who are you taking share from? Is it mainly legacy players or homegrown solutions?

It's mainly the legacy players that we're seeing as the donor pool.

Our next question comes from the line of Ian Zaffino with Oppenheimer & Company.

This is Isaac Sellhausen on for Ian. My first on the cost side, can you talk about labor and component hardware costs and your expectations for the year? The EBITDA margin guide is certainly strong. I'm just trying to understand the cost-saving measures you talked about and you've already taken, and maybe how that flows through for the year.

Yes, thank you. $100 million is the annualized costs we're taking out this year, and it's split between the three areas I talked about. The first being hardware, which is simplifying how we design our products, and those changes have been made—and as we go through our inventory, that will start to impact the P&L and is starting to impact the P&L. We'll get most of the savings this year, and that's worth $25 million. The next area is services, and that's around using our remote self-capability more, hiring skill sets that match the entry skill set need versus the overall NCR need, and also structural changes to get rid of overlaps between organizations. We're about halfway through $50 million is what we're targeting there, and we've taken about $25 million of actions. We anticipate taking more before we end this quarter. A lot of that will be behind us. The last area is our real estate footprint and our corporate footprint. We're focused on reducing resources, shifting to lower-cost strategic value centers and closing down some facilities, and that's underway. We have probably 60% of that behind us. This year, we expect at least $70 million of in-year savings related to this program, and we're trying to drive more.

I would just say that on those cost savings, those are the net numbers. We're going to reinvest some of that if you look at the Q4 exit run rate, that's what we're reinvesting back in go-to-market in sales, just to make sure we can continue to grow the business. While we're making the strategic savings in certain areas, they're—I’ll say a little more surgical as we look at the foundational elements that Brian described, where we're not making cuts is things like customer support, product innovation, and investment in sales and go-to-market; we're continuing investment there.

And then just as a quick follow-up regarding free cash flow for the year. Maybe if you could talk about your capital allocation priorities at 3.7x. What's the pace you'd like to move down to the 2 to 3x long-term net leverage target?

Yes. For this year, it's going to be investing in our CapEx, which is $250 million. And then from there, laying the free cash flow, adding to our cash balance to bring down net debt. We think we can get net leverage to 3.3 to 3.4 turns by the end of the year, and that's our focus for this year.

Our next question comes from Alex with Stephen.

Just within the retail business, can you just give us a sense of how much the platform sites are contributing to that segment? When could we see that moving the needle just from a growth standpoint?

Yes. We're seeing good growth in the platform sites. You saw the numbers, and they are contributing to overall growth. If I take Mayank’s original question around ARR and I look at that ARR growth that we're expecting to see in the mid- to high single digits in 2024. That's all coming from platform-connected sites. If I break that down even further and think about software-specific-related ARR in that business, we'll see software-specific ARR getting into the low double-digit growth in 2024, and that's all about connecting these sites to the platform. When we connect these sites to the platform, we're getting an uplift in ARPU; when we make that connection, it allows us to cross-sell and upsell. As these cohorts age, we're starting to see that benefit our recurring revenue streams, and that's what you'll see in these growth numbers. Again, the overall numbers are a little muted because of hardware and retail, but the rest of the software business and recurring revenue streams are growing nicely.

And then just given some of the lumpiness associated with hardware, if you could provide any color on the expected cadence in revenue in 2024 within the retail and restaurant segment would be helpful.

Sure. For restaurants, we expect to be flat to up 1% overall, but that's made up of software and services growing 5% and hardware being down. In retail, the decline is roughly 4% due to hardware; software and services are growing 1%. If I adjust for the $25 million nonrecurring software payment that I mentioned, it would be up 3%. We're seeing growth in all three businesses on the software and services line; it's just hardware is putting pressure, especially on retail.

Thank you. And we have reached the end of the question-and-answer session. And I'll now turn the call back over to CEO, David Wilkinson for closing remarks.

Yes. In closing, I'd like to thank our customers again for the trust they put in us every day to help them achieve their strategic objectives. I'd also like to thank again our NCR Voyix colleagues for their contribution to our success up to now and our investors for their ongoing support. As I stated earlier, we remain committed to serving our existing clients and bringing them all on the platform journey. Our platform investments over the past years have provided real value to our customers, and we're going to continue to connect them to the platform. We've built a solid foundation for growth within our base and growth of new customers, specifically in the mid-market. While we're proud of where we are, we need to do better at turning this foundation into growth, and this focus will show up in our results. I believe in the plan we have outlined today, and I believe in this management team to execute. Thank you all for joining the call.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.