NCR Atleos Expands Margins as Revenue Growth Stalls
Adjusted EBITDA margin widened 4.6 percentage points to 23.0% despite flat revenue.
NCR Atleos Corp. (NATL), the self-service banking technology provider, increased second-quarter adjusted EBITDA 25% to $254 million as profitability accelerated despite stalled sales growth.
Revenue was flat from a year earlier at $1.103 billion, a sharp slowdown from 7% growth in the first quarter, though it increased 5.8% sequentially. Net income attributable to Atleos rose 67% to $65 million, extending the prior quarter's 57% increase, while net-income margin widened to 6% from 4%.
The earnings growth reflected a richer software-and-services mix, productivity gains, tariff refunds, settlement processing and lower vault-cash costs. Gross margin expanded 5.1 percentage points to 28.0%, while operating income rose to $156 million from $119 million despite higher selling, general and administrative and research-and-development expenses.
Self-Service Banking revenue edged up 1% to $741 million after advancing 12% in the first quarter, as weaker hardware sales and installation services offset growth in software and services. The segment's adjusted EBITDA rose 13%, accelerating from 5% growth, and its margin widened 2.9 percentage points to 28.6%.
That mix shift extended across the company. Service revenue increased 2.2% to $855 million, while product revenue fell 6.4% to $248 million. ATM-as-a-Service revenue grew 24% to $77 million, easing from approximately 30% growth in the prior quarter, and companywide recurring revenue accounted for 70% of revenue, down from 72%.
Network revenue declined 1% to $316 million as weaker cryptocurrency-transaction demand offset volume growth in South Africa and Australia. Adjusted EBITDA rose 23% to $106 million after declining 2% in the first quarter, lifting the segment's margin to 33.5% from 27.0% a year earlier.
Operating cash flow improved to $30 million from a $25 million outflow a year earlier, while adjusted unrestricted free cash flow turned positive at $16 million from negative $13 million in the first quarter. Atleos now expects its Brink's transaction to close early in the first quarter of 2027, ahead of its previous target of completion by the end of that quarter.