NCR Atleos Spin-off Deep Dive

November 6, 2023


On October 16, 2023, NCR (now NCR Voyix) spun off its ATM business, NCR Atleos (NATL).

Cash usage / and ATM usage is in secular decline. As such, NCR Atleos faces a challenging future.

The company does have some positives

  • 68% recurring revenue
  • 55% exposure to ex-US (higher usage of cash outside the US)

Nonetheless, I’m not too excited about NATL.

The company is burdened by a significant debt burden (net debt to EBITDA: 3.3x) and my experience is that a significant debt burden coupled with secular headwinds is not a good combination.

Further, management provided overly optimistic guidance (6% annual revenue growth and 15% annual EBITDA growth) for the foreseeable future. I think the guidance is unrealistic unless NATL makes a sizable acquisition.

NATL’s best comps are Euronet (EEFT) and The Brinks Company (BCO) which trade at 5.7x and 6.5x forward EBITDA, respectively. These valuations imply a fair value range for NATL of $24 to $32. The stock currently trades at $25.

What could get me more excited about the stock?

  • Demonstrated ability to grow organically and improve margins
  • Insider buying
  • A share repurchase authorization

Resources from NCR Voyix Corporation:

Spin-off Press Release – September 15, 2022

Spin-off Slide Deck Presentation – September 16, 2022

NCR Voyix (RemainCo) Investor Day – September 5, 2023

Form 10 – September 5, 2023

NCR Corporation Investor Relations:
Michael G. Nelson
Vice President, Investor Relations


Other Resources

NCR Atleos Set to Join S&P SmallCap 600 – October 11, 2023

NCR Voyix Corporation Debuts Following the Spin-off of ATM-focused Business – October 17,2023

Allpoint Network Expands Service Delivery for Isabella Bank – October 17, 2023

NCR Atleos Looking to Expand Internationally, CEO Says – October 24, 2023

NCR Atleos Overview

The spinoff of NCR Atleos was originally announced on September 15, 2022. The spin-off was tax free in nature.

The spin-off took place on October 16, 2023.

NCR shareholders received 1 share of the spin-off for every 2 shares owned of NCR.

Why the Spin-off?



Spin-off Overview

Company: NCR Atleos (Ticker: NATL)

The company’s main source of revenue is its ATMaaS (ATM-as-a-service) offered to banks and retail establishments that are looking for a turnkey solution or simply wish to have Atleos’ software integrate their existing infrastructure. Atleos delivers mission-critical solutions to a durable customer base under long term contracts, which allow the company to generate diversified and largely recurring revenues across contracted software, services and predictable transactional revenue streams.

The company is undergoing a shift in its revenue model. This shift is aimed at increasing the share of total revenue represented by recurring revenue. This recurring revenue stream flows directly from the subscription fees paid to Atleos in exchange for its ATMaaS.

ATMaaS is a term used to refer to an assembly of solutions offered by Atleos:

1- Software

The software component constitutes the driving force behind the revenue model shift towards predominantly recurring revenue by allowing Atleos to earn said recurring revenue on a subscription basis via multi-year contracts. This process consists of developing, installing, supporting and running software.

The software is branded as Digital First ATM software platform and has numerous functionalities: device management, endpoint security, ATM marketing, cash management (Optisuite), transaction processing, personalization and application software.

2- Managed services


ATM distributors rely on Atleos to handle some, or all of the operational aspects associated with operating and maintaining ATMs, typically in exchange for a monthly service fee, a fee per transaction, or a fee per service provided. ATMaaS is a solution that helps banks run their end-to-end ATM channel through various offerings: transaction processing, managing cash and cash delivery, supplies, and telecommunications as well as routine and technical maintenance.

There is also a full line of software offered as part of the suite of services: Multi-vendor ATM management systems software application suite and related hardware including multi-function ATMs, ITMs (interactive teller machines), thin-client ATMs, cash dispensers, and cash recycling ATMs.

There are also additional service offerings as part of the managed services: back office, cash management, software management, ATM deployment.

Atleos managed/serviced approximately 715,000 ATMs as of Dec. 31, 2022.

3- Branding

Atleos augments its revenue streams through branding arrangements by attaching customer logos to hardware units. Atleos will typically receive a fixed fee per branded ATM from the financial institutions while retaining their standard fee schedule for other cardholders using the bank-branded ATMs.

4- Hardware

Atleos develops, assembles, distributes and maintains a variety of ATM hardware units. The company can also repair or maintain its own units as well as third-party units.

The company’s hardware product offerings are the following:

  • Multi-function ATMs (automated teller machines)
  • ITMs (interactive teller machines): Used for more complex tasks:
  • Card issuance and replacement, opening accounts, and applying for loans
  • Customer support and servicing via interactive video
  • Cash dispensers
  • Cash recycling ATMs

5- Proprietary AllPoint ATM Network

AllPoint is a retail-based ATM network with two functionalities:

  • It provides convenient and surcharge-free cash withdrawal and deposit access to end consumers and cardholders
  • Offers the option to convert a digital value to cash, or vice versa, via NCRPay360.

The network contains 1,200 participants made up of credit unions, banks, digital banks, fintechs, stored-value debit card issuers, and other consumer financial services providers.


Atleos typically earns a fixed monthly fee per cardholder or a fixed fee per transaction by the consumer’s financial institution or the card/benefit issuer.

Interchange revenue is also earned on each transaction performed at one of the participating Allpoint ATMs. Allpoint receives a fee per issued stored-value debit card or transaction in return for allowing the users of those cards surcharge-free access to Allpoint’s participating ATM network.

Atleos owned and operated approximately 85,000 ATMs as of Dec. 31, 2022, the majority of which are part of the AllPoint network.


A partnership with Payfare allows Atleos to tap into the gig economy (Uber, Doordash, Lyft) .

Arrangement types:

  • Company-owned:

Atleos earns revenue on a per transaction basis from the surcharge fees charged to cardholders for the convenience of using Atleos’ ATMs and from interchange fees charged to cardholders’ financial institutions for processing the transactions conducted on Atleos’ ATMs, or on a fixed monthly recurring fee.

  • Customer-owned or partner-owned:

Bank, retail merchant or independent distributor owns the ATM and is usually responsible for providing cash and performing simple maintenance tasks while Atleos generally provides processing only services or various managed services solutions.

In spite of growth in card-based and other non-cash payment volumes, overall cash withdrawals and usage continue to grow according to NCR Atleos management. As the volume and value of cash withdrawals continue to rise, Atleos expects to earn more revenue based on a growing global ATM footprint as well as increased per unit usage.


Trends contributing to expansion of addressable market:

  • Shifting consumer preferences
  • Growing cash withdrawals and usage
  • Branch transformation and focus on efficiency
    • As banks close branches, it is important for their customers to be able to continue to access ATMs, which they can do through Atleos’ proprietary AllPoint network
  • Financial inclusion shifting the retail banking landscape
    • Un-banked and under-banked regions present with substantial greenfield opportunity
  • Proliferation of e-commerce
    • Management believes that having ATMs near retail stores can help counteract the tendency for increased purchasing to take place through online retailers rather than brick and mortar stores.




Over the last four years (2020-2023E), the trend in revenue has been positive (10.1% CAGR), with the growth coming entirely from service revenue while product revenue remained flat.

However, the big growth driver was the acquisition of Cardtronics (9.5x acquisition multiple) which closed in June of 2021 which added $1.1BN of inorganic revenue. Organic growth has been minimal over the same period.

Margin trends don’t look great. Gross margins have remained flat, with declines in service and product margins. Operating and net margins also appear to be trending downwards. The difficulty the company exhibits in growing its margins tends to cast doubt over the strength of the company’s competitive advantage.


The company has grown its adjusted EBITDA at a CAGR of 19.4% over the four year period from 2020-2023E, however, the big driver was the Cardlytics acquisition.



The company’s declining trend in adjusted FCF is suggestive of a need to invest ever larger amounts of capital, which seems to run against one of the company’s main selling points: it is a capital light business.

The company has grown its revenue and adjusted EBITDA figures well in the recent past. However, it is not experiencing increasing margins, nor is it generating increasingly large amounts of FCF. This likely means that moving forward, we can expect that the business will remain largely stagnant with the opportunities flowing mostly from the transition to a recurring revenue model.


Management painted a rosy picture during its analyst day. It expects revenue to grow 6% per year and EBITDA to grow 15% per year for the foreseeable future. It expects FCF more than triple between 2024 ($150MM) and 2027.

I’m skeptical these targets are reasonable given secular challenges to the cash usage / ATM market. I’m also worried that management makes a big acquisition in order to hit its revenue/EBITDA goals.

Company Strategy




Atleos’ competitors:

Global ATM software, services, and hardware companies: Diebold Nixdorf, Hyosung, Brinks and Euronet.

Alternative payment mechanisms: Venmo, Zelle, Square Cash, Facebook Messenger Payments, Apple Pay, virtual currencies such as Bitcoin and other emerging payment technology

Other competitors: Fidelity National Information Services Inc., Fiserv, Inc, Temenos AG, Infosys Ltd, ACI Worldwide, Inc



Timothy C. Oliver:

Mr. Oliver will serve as Atleos’ Chief Executive Officer. Prior to this role, he was Chief Financial Officer of NCR, a role he has held since July 13, 2020.

Work experience:

  • Mr. Oliver previously served as President and Chief Financial Officer of Spring Window Fashions, LLC, a consumer goods company, and a member of the company’s leadership team, from September 2019 to July 2020. In this role he focused on, among other things, aligning the company’s business portfolio and growth initiatives with its finance strategy.
  • From 2011 to 2019, he served as Senior Vice President and Chief Financial Officer of the Goldstein Group Inc. (“GGI”), a privately held conglomerate, and its subsidiary, Alter Trading Corporation (“Alter”), a privately held metal recycler and broker company. Mr. Oliver also served as President during his last three months in his role at Alter.
  • Before joining GGI and Alter, he was the Senior Vice President and Chief Financial Officer of MEMC Electronic Materials, Inc., a publicly held technology company (now SunEdison, Inc.), from 2009 to 2011.
  • He was Senior Executive Vice President and Chief Financial Officer of Metavante Technologies, Inc., a publicly held bank technology processing company, from 2007 to 2009.
  • He also previously served as Vice President and Treasurer of Rockwell Automation, Inc. (“Rockwell Automation”), an industrial automation and digital transformation company, from 2005 to 2007.
  • Before joining Rockwell Automation, he was Vice President for Investor Relations and Financial Planning at Raytheon Company. Mr. Oliver’s prior roles included a focus on transforming finance organizations to position companies for growth.


Paul J. Campbell:

“Paul J. Campbell will serve as our Chief Financial Officer. We expect Mr. Campbell will continue to serve as Vice President of Finance for NCR until the completion of the spin-off, a role he has held since 2019. In his current role at NCR, Mr. Campbell is responsible for supporting NCR’s self-service banking, digital banking, payments, and product services in finance. He actively participates in strategic review processes and external reviews as well as driving business improvements. He also supports key acquisitions and integration. Mr. Campbell joined NCR in 1989 and has provided over thirty years of financial leadership and executive business support to NCR, including many extensive assignments overseas. He initially performed internal process audits in the United Kingdom, then later served as a controller for NCR’s businesses in China and then later in Australia. Additionally, he previously served as the Sales Finance CFO for NCR’s Asia Pacific Sales for many years. In his role today, Mr. Campbell continues to leverage business intelligence and analytics to drive top and bottom line results. Mr. Campbell is a qualified member of the Charter Institute of Management Accountants.”


The CEO is not a company veteran. He has been working for NCR as CFO since 2020, which means he has 2 years of experience working for the company. His past work experiences, for the most part, do not seem to be all that relevant to the current business which he will be heading.

However, the individual who will be serving as the CFO of Atleos is a company veteran. It does seem to be more sensible to have the industry veteran take the helm of Atleos, but that does not seem to be taking place in this situation.


Atleos’ stock incentive plan states that 6 million shares (approximately $120MM worth of compensation) will be reserved for executive compensation.


Capital Structure

NCR Atleas will have a decent debt load although it is well positioned to handle it given that 68% of revenue is recurring.

NCR Atleos’ debt maturities range from 5 years to 8 years with an estimated weighted average interest rate of approximately 8.32%.


NCR Atleos currently expects that it will pay regular dividends following the distribution and is currently expecting to target a dividend payout of approximately 35% of unrestricted adjusted FCF.

It expects to pay a $0.20 quarterly dividend starting in 2024. This works out to a current dividend yield of 3.3%.

The company expects to grow its FCF and dividend meaningfully over time.



Appropriate comps include Diebold Nixdorf (DBD), Euronet (EEFT) and The Brinks Company (BCO). All three are focused on cash management, transportation, and/or ATMs and have comparable margin profiles.

DBD just emerged from bankruptcy and burned considerable cash in the first half of 2023. As such, Euronet and Brink’s are probably most comparable to NCR Atleos.

Assuming NATL deserves to trade between 5.7x and 6.5x forward EBITDA, the stock is worth $24 and $32.



  • NATL has significant debt. 68% recurring revenue will help manage the debt load even in a challenging macro environment, but there isn’t much room for error.

Secular Headwinds

  • The use of cash and ATMs is in secular decline. NATL has a strategy to increase service revenue and recurring revenue, but the strategy is unproven.

Bad Acquisition

  • I expect NATL to make a sizable acquisition in order for it to hit its long term revenue growth goals.

Putting it All Together

While there are some positives including 68% recurring revenue and 55% exposure to ex-US (high US of cash outside the US), I’m not too excited about NATL.

A significant debt burden coupled with secular challenges is usually not a good combination.

If management were more focused on organic growth and returning cash to shareholders, I would be more excited.

What would make me more position:

  • Demonstrated ability to grow organicallyand improve margins
  • Insider buying
  • A share repurchase authorization


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