Coming off what President and CEO Michael Hayford referred to as a “solid finish to an unprecedented challenging year,” NCR finished Q4 below expectations and reported a loss where it had reported a profit a year earlier. Hayford said that despite the rough ride through 2020, the firm enters 2021 with solid fundamentals as well as the addition of the Cardtronics ATM platform.
“We generated strong cash flow, increased recurring revenue and improved our cost structure. I am extremely proud of the NCR team as we continue to execute our strategy and expect to emerge from the pandemic a much stronger company,” Hayford said in a statement. “We enter 2021 with a strong financial position and are excited about the opportunity that the proposed transaction with Cardtronics is expected to bring. The proposed transaction accelerates our NCR-as-a-Service strategy and expands opportunities in payments, while further shifting NCR’s revenue mix to software, services and recurring revenue.”
Moreover, though Hayward told analysts he would not confirm a specific end date for the pandemic period’s impact on their business, he did confirm that they are working with a date in mind internally.
“Retail is going to have a good impact on our business,” Hayward said. “If you look at what’s happening to us in the bank environment, the banks are still operating, but they’ve been a little bit concerned because of the financial performance, with net interest margin spread trapping on them this year with the fiscal policies, and then also just not knowing when this economic impact ends. We’ve seen them slow down a little bit in their capital spend. Retail is a little bit more of a strategic push. We think they will have to retool their POS technology going forward.”
Moreover, he said, their expectation is that as consumers begin to resume elements of their normal lives as the vaccine helps them feel comfortable heading out to restaurants or retailers, recovery will follow.
However, CFO Tim Oliver noted that the timing of growth and recovery is incredibly difficult to predict at this early phase, as so much remains contingent on the vaccine and its progress. “Until we see the vaccine, and the pandemic is been more under control, we’re in a holding pattern,” Oliver said. “But we have seen some positive momentum going into the year, and I think there’s cautious optimism based on the momentum we’ve seen in the last two quarters.”
Hayford also talked up NCR’s enhanced investment in digital banking, anticipating a future where consumers are transacting their financial lives online to a far greater degree. NCR has particularly focused on Serafina, its online account opening product, and its Client Services Platform, which aims to give partner banks the ability to customize their digital banking offerings.
“We want to make it easy to connect what you do on mobile to digital. We have found that a lot of our competitors in that space aren’t really looking horizontally as we are, so I think that’s what allows us to win,” Hayford said.
The firm reported a fourth-quarter loss of $197 million, or $1.62 per share. Earnings, adjusted for restructuring costs and to account for discontinued operations, were 59 cents per share — a miss on analysts’ expectations of 66 cents per share. Revenue came in at $1.63 billion in the period, in line with analysts’ forecasts and representing a full 54 percent of the year’s total.
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