NCR Voyix's Q1 2025 Earnings: Struggling Top Line, But Brightening Bottom Line

NCR Voyix Corporation (VYX) reported mixed results for Q1 2025, with revenue declining 13% year-over-year to $617 million, yet the company narrowed its net loss to $20 million and improved its Adjusted EBITDA to $75 million. The results highlight a challenging revenue environment but suggest operational efficiency gains and a strategic pivot toward recurring revenue streams.

Revenue Decline: Hardware Headwinds Dominate

The top-line contraction was driven by a steep drop in product revenue within the Retail segment, which accounts for much of NCR’s hardware sales. Total revenue fell to $617 million from $710 million in Q1 2024. While Software & Services Revenue dipped slightly to $479 million, the company emphasized progress in its recurring revenue model:

• Annual Recurring Revenue (ARR) grew to $1.62 billion, up 2.5% year-over-year.
• Software ARR rose 4.7% to $775 million, reflecting strength in subscription-based services.

The decline in hardware sales underscores broader macroeconomic challenges, including lingering trade tariff impacts and the company’s ongoing transition to a net revenue model for its hardware business with partner Ennoconn.

Profitability Improves: Margins Expand, Loss Narrows

The most encouraging metric was the significant reduction in net loss, from $71 million to $20 million, even as revenue fell. Adjusted EBITDA rose 19% year-over-year to $75 million, with a margin of 12.2%—up from 8.9% in 2024. This margin expansion suggests cost discipline and operational streamlining.

Non-GAAP diluted EPS turned positive at $0.09, compared to a loss of $0.61 in the prior year. CEO Jim Kelly highlighted the narrowing loss as evidence of “resilience in a softer economic environment.”

Recurring Revenue: The Silver Lining

While hardware struggles dominate the headlines, NCR Voyix’s shift toward software and services appears to be paying off. Key metrics:

• Platform Sites: 77,000 (up 27% YoY), indicating expanding customer adoption of its digital commerce platforms.
• Payment Sites: 8,000 (up 7% YoY), reflecting growth in its payment processing capabilities.

These recurring revenue streams are critical to NCR’s long-term health. The company’s 2025 outlook assumes $2.575 billion–$2.65 billion in total revenue, with software & services contributing $1.995 billion–$2.02 billion.

Strategic Moves: Leadership and Buybacks

The quarter saw two key strategic actions:

1. Leadership Change: Nick East was appointed Chief Product Officer to drive innovation in software and hardware solutions.
2. Share Repurchases: The company repurchased $69 million of shares in Q1 and April, and expanded its buyback program to $200 million, now including Series A preferred stock.

The buyback program, which has already reduced shares outstanding, signals confidence in cash flow stability despite revenue headwinds.

Risks and Challenges Ahead

NCR Voyix faces several risks that could derail its progress:

• Hardware Transition: The shift to a net revenue model with Ennoconn could create volatility in gross margins and revenue recognition.
• Tariffs and Trade: U.S. trade policies continue to pressure global supply chains, with NCR assuming current tariff impacts in its outlook.
• Currency Risks: Foreign exchange fluctuations could affect international operations, particularly in Europe and Asia.

Conclusion: A Company in Transition

NCR Voyix’s Q1 results are a mixed bag: revenue struggles persist, but the company is making progress in profitability and recurring revenue growth. The 19% rise in Adjusted EBITDA and 27% jump in platform sites suggest that its software-driven strategy is taking hold.

Investors should focus on two key metrics:
1. ARR Growth: The $1.62 billion ARR is up 2.5% year-over-year—modest but positive. A sustained acceleration here would validate the software pivot.
2. Margin Expansion: The 12.2% EBITDA margin is a significant improvement, but sustaining this amid hardware headwinds will test management’s cost controls.

The company’s decision to expand its share repurchase program despite revenue declines underscores confidence in its liquidity and long-term prospects. However, investors should remain cautious about the hardware transition and macroeconomic risks. For now, NCR Voyix appears to be navigating a tough environment better than feared—but it’s still early in its turnaround story.

Final Take: Hold for now. The stock’s performance (down 15% YTD as of this writing) reflects revenue concerns, but the margin improvements and buyback signal strategic momentum. A rebound in hardware sales or a breakthrough in software adoption could unlock upside.