Executive Summary / Key Takeaways

• Strategic Transformation Driving Growth: NCR Atleos has successfully transitioned into a pure-play self-service banking leader, leveraging its extensive installed base and proprietary technology to drive higher revenue per ATM through software and services.
• Robust Q2 2025 Performance: The company delivered strong Q2 2025 results, with consolidated revenue of $1.10 billion (+2% YoY), Adjusted EBITDA of $205 million (+4% YoY), and Net Income of $45 million (+52% YoY), driven by accelerating ATM-as-a-Service (ATMaaS) and hardware demand.
• Accelerating ATMaaS Momentum: ATMaaS revenue surged 32% year-over-year to $62 million in Q2 2025, with a 40% gross margin and a record $177 million in new total contract value bookings, underscoring the success of its outsourcing strategy.
• Strengthening Financial Profile & Capital Returns: Net leverage is projected to drop below 3x in Q3 2025, supported by strong free cash flow generation. The Board's authorization of a $200 million share repurchase program signals confidence in future cash flows and a commitment to enhancing shareholder value.
• Resilient Outlook Despite Headwinds: Despite macroeconomic pressures and tariff uncertainties, Atleos reaffirmed its full-year 2025 guidance, anticipating continued profitable growth and effective mitigation of external challenges.

The Enduring Power of Self-Service Banking

NCR Atleos Corporation, with roots tracing back to 1884, stands as an industry leader in financial technology, providing self-directed banking solutions globally. The company's core business revolves around automated teller machine (ATM) and interactive teller machine (ITM) technology, encompassing software, services, hardware, and its proprietary Allpoint network. This comprehensive suite enables seamless transactions across various channels, tapping into a rapidly growing, secular trend in self-directed banking.

The company's journey was significantly reshaped by its spin-off from NCR Corporation (now NCR Voyix Corporation (VYX)) on October 16, 2023. This pivotal event established Atleos as an independent, publicly-traded entity, allowing it to sharpen its focus exclusively on the self-service banking sector. While the separation initially presented operational complexities, including service disruptions, Atleos swiftly addressed these by fully separating service operations, transitioning to specialist teams, and investing in modern systems. This strategic pivot culminated in "unmitigated success" in 2024, marked by a return to best-in-class service levels and a solidified market position.

Atleos's overarching strategy is to generate more revenue for every device it supports. This dual approach involves providing high-quality, efficient, and comprehensive services to financial institutions and driving increased transaction volumes across its owned network machines. Both strategies are fueled by a fundamental customer desire to enhance financial access while outsourcing more of their cash ecosystem. Atleos is uniquely positioned to benefit from either a shared financial utility model or an outsourced bank-specific fleet, leveraging a common infrastructure that boasts unmatched scale and world-class capabilities.

Technological Edge and Innovation Driving Growth

Atleos's competitive moat is deeply rooted in its differentiated technology and continuous innovation. The company's core offerings include advanced ATM and ITM hardware, a robust software platform built on cloud-native microservices and APIs, and the extensive Allpoint network. These technologies provide tangible benefits that enhance customer experience, optimize operations, and drive financial performance.

The ATM-as-a-Service (ATMaaS) solution exemplifies this technological differentiation. It offers end-to-end management, encompassing back-office operations, cash management, software deployment, and ATM maintenance. This allows financial institutions to outsource their entire ATM channel, significantly improving efficiency and reducing operational burden. The Allpoint network, a proprietary asset, provides convenient and fee-free cash withdrawal and deposit access to over 75 million cardholders, a critical offering in an environment of steady cash-based transactions.

Recent innovations further underscore Atleos's technological leadership. The company's upgraded recycler products are experiencing high demand, reflecting their enhanced capabilities. The activation of TAP technology on approximately 10,000 Allpoint machines generated over 1 million transactions in Q3 2024, demonstrating the immediate impact of new features. Furthermore, Atleos's AI-driven dispatch and service optimization model, successfully tested in Canada and rolled out across North America in Q2 2025, now enables over 65% of total dispatches in those regions to be scheduled without manual intervention. This directly translates to lower operational costs and improved service efficiency.

These technological advancements are not merely features; they are strategic levers. They contribute to Atleos's competitive advantage by offering superior operational efficiency, enabling higher average selling prices for more capable devices, reducing costs through automation, and ultimately expanding margins through a favorable software and services mix. The company's ongoing product innovation efforts, including prototype machines and customer feedback panels, ensure its technology roadmap remains aligned with evolving market needs, solidifying its market leadership.

Competitive Landscape: A Differentiated Position

Atleos operates in a competitive financial technology landscape, with key direct rivals including Diebold Nixdorf , Fiserv , and Fidelity National Information Services (FIS). However, Atleos maintains a differentiated position by uniquely addressing both shared financial utility and outsourced bank-specific fleet models. This "win-both-ways" capability is a significant competitive advantage.

Compared to Diebold Nixdorf , Atleos's integrated hardware, software, and services approach for self-service banking offers greater efficiency in large-scale deployments and a more comprehensive ecosystem solution. While Diebold Nixdorf (DBD) emphasizes hardware security, Atleos's interactive teller machine technology and end-to-end management capabilities provide a distinct edge in customer experience and operational outsourcing. Atleos's market leadership, evidenced by being the global ship share leader for eight consecutive years and holding the number one position for installed base in 2024, further solidifies its standing against DBD.

Against software-centric players like Fiserv (FISV) and FIS, Atleos's strength lies in its hardware-driven self-service solutions, which provide tangible, on-site customer interaction. While FISV and FIS excel in pure software innovation and advanced analytics for payments, Atleos's strategy of combining robust physical infrastructure with comprehensive services offers a compelling value proposition, particularly in markets where physical access and reliability are paramount. The company's vertical integration is a "huge asset," making the operation of new machines "incredibly inexpensive" and driving powerful margin expansion.

Competitive pricing pressure is primarily observed in the service component, particularly in cost-sensitive markets like India, rather than in hardware. However, the overall competitive dynamics among major players remain stable, with the top three consistently holding a significant global market share. Atleos's strategic positioning, supported by its proprietary technology and scale, creates substantial barriers to entry for new competitors, including regulatory compliance and the sheer investment required in integrated hardware and network infrastructure.

Operational Excellence and Financial Momentum

Atleos's strategic focus on services and software, coupled with relentless operational execution, has translated into strong financial performance. The year 2024 was a period of "unmitigated success," where the company solidified its strategic direction, improved service levels, and reinvigorated innovation efforts.

In Q2 2025, Atleos reported consolidated revenue of $1.10 billion, a 2% increase year-over-year, with core top-line growth of 4%. Adjusted EBITDA grew 4% year-over-year to $205 million, resulting in an Adjusted EBITDA margin of 18.6%, up 40 basis points. Net income saw a substantial 52% increase to $45 million, with diluted EPS reaching $0.60, up 46% year-over-year. Recurring revenue constituted 70% of total revenue, highlighting the stability of its business model.

The Self-Service Banking (SSB) segment was a primary growth engine, with revenue increasing 9% year-over-year to $733 million. This was driven by a 20% surge in hardware revenue, fueled by an industry refresh cycle and demand for newer recycler models, and a 5% combined growth in services and software. SSB's Adjusted EBITDA climbed 20% to $189 million, with margins expanding 240 basis points to 25.8%, reflecting a favorable hardware mix, services growth, and productivity gains.

Within SSB, the ATM-as-a-Service (ATMaaS) offering demonstrated exceptional momentum. Revenue grew 32% year-over-year to $62 million, achieving a 40% gross margin, up an impressive 900 basis points. ATMaaS bookings reached a record $177 million in new total contract value in Q2 2025, driven by a 25% increase in unique customers and expansion into new geographies like Spain. Annualized Recurring Revenue (ARR) for ATMaaS reached $249 million, up 32% year-over-year, with an average revenue per unit (ARPU) of $8,300. The backlog for ATMaaS units is robust, exceeding 8,000 units with an ARPU of approximately $9,100, positioning the business for continued acceleration.

The Network segment, while experiencing a 2% year-over-year revenue decline to $320 million in Q2 2025, faced temporary headwinds from lower cardless payroll transactions, reduced dynamic currency conversion due to less international travel, and expiring interest rate hedges on vault cash. Despite these, Adjusted EBITDA was $86 million, with a solid 26.9% margin. The segment continues to expand its footprint and transaction types, welcoming 7-Eleven locations back to the Allpoint network, activating FCTI for processing, and adding Casey's (CASY) (2,900 locations) and Access Cash (6,500 ATMs in Canada). Cash deposit transactions grew 170% in H1 2025, exceeding $1 billion in annualized deposits for the first time, and ReadyCode expanded its digital payment presence through a partnership with InComm Payments.

Cost management initiatives are yielding significant results. Selling, General, and Administrative (SG&A) expenses decreased 12% in Q2 2025, benefiting from a gain on the sale-leaseback of ATMs and ongoing cost optimization. Interest expense declined 13% due to lower variable rates from the Q4 2024 debt restructuring and reduced debt balances. Research and Development (R&D) expenses, however, increased 55% as the company invests in "people costs" to fuel innovation.

From a liquidity perspective, Atleos generated $15 million in free cash flow in Q2 2025, despite investments in working capital to support anticipated Q3 hardware deliveries. Net cash provided by operating activities for H1 2025 was $100 million. The company's debt profile has significantly improved, with net leverage reducing from 3.7x at the spin-off to approximately 3.1x by the end of Q2 2025. The successful refinancing of credit facilities in October 2024 reduced interest costs by an estimated $17 million annually, further strengthening its financial position.

Outlook and Capital Allocation: A Clear Path Forward

Atleos has reaffirmed its full-year 2025 guidance, projecting core revenue growth of 3-6% (constant currency), Adjusted EBITDA growth of 7-10% (constant currency), Adjusted EPS between $3.90 and $4.10, and free cash flow of $260-300 million. For Q3 2025, the company anticipates mid-single-digit core revenue growth, with SSB revenue growing mid- to high single digits (including ~20% hardware growth) and Network revenue remaining flat. Adjusted EBITDA is projected between $210-225 million, with Adjusted EPS in the range of $0.95-$1.10. Free cash flow is expected to "meaningfully step up" in the second half of the year, with a 40/60 split between Q3 and Q4.

Management's confidence is underpinned by a robust backlog of ATM deliveries and strong ATMaaS growth, coupled with ongoing cost productivity initiatives. These factors are expected to offset challenges such as lower cardless transactions in the Network business and persistently high interest rates impacting vault cash costs. While the company had initially anticipated four Fed rate cuts in 2025 that did not materialize, it has absorbed this impact within its guidance.

A key strategic focus remains on capital allocation. Net leverage is expected to fall below 3x in Q3 2025 and reach approximately 2.8x by year-end 2025. This improved financial flexibility has enabled the Board to authorize a $200 million share repurchase program on July 25, 2025, representing approximately 10% of the current market capitalization. This program will be executed via a 10b5-1 plan, balancing share repurchases with continued debt reduction and opportunistic "small bolt-on acquisitions." Management views the company as "undervalued relative to our industry and relative to our peers," making share repurchases a "compelling value-enhancing" use of capital.

Risks include ongoing geopolitical and macroeconomic challenges, such as higher interest rates, increased logistics costs, and foreign currency fluctuations. U.S. trade policy actions since February 2025, including proposed import tariffs, are being actively monitored. While the impact was not material in Q2 2025, Atleos has mitigation plans in place for potential future effects in 2026 and 2027, including supply chain adjustments and pricing actions. The company does not anticipate a 50% tariff in India to be a long-term issue. Specific to the Network business, volatility in cardless payment transactions, particularly in certain U.S. regions, remains a concern, though management expects these impacts to be transitory. Seasonality also influences quarterly revenue and cash flow. Cybersecurity risks are managed through robust policies, with no material incidents identified to date.

Conclusion

NCR Atleos has successfully navigated its post-spin transformation, emerging as a focused and formidable leader in the self-service banking sector. Its strategic emphasis on high-margin services and software, particularly the accelerating ATM-as-a-Service offering, is driving consistent revenue growth and significant margin expansion. The company's technological differentiators, including its advanced ATM/ITM solutions, the expansive Allpoint network, and AI-driven operational efficiencies, provide a strong competitive moat against both hardware-focused and software-centric rivals.

With a rapidly improving financial profile, marked by substantial debt reduction and robust free cash flow generation, Atleos is poised to deliver enhanced shareholder value. The newly authorized share repurchase program underscores management's confidence in the company's intrinsic value and future prospects. Despite facing macroeconomic headwinds, Atleos's reaffirmed 2025 guidance and proactive risk mitigation strategies position it for continued profitable growth, making it a compelling investment opportunity in the evolving cash ecosystem.