NCR Voyix Corporation (NYSE: VYX) reported solid 1Q24 results with a beat on revenue and adjusted EPS compared to consensus estimates. Despite a decline in overall revenues due to lower hardware sales, the software and services segment saw growth. The adjusted EBITDA margin expanded, and net loss attributable to shareholders decreased. The Company reaffirmed its FY24 guidance following the strong performance in 1Q24.
The valuation of NCR Voyix remains positive, with an intrinsic value of $21.00 per share, representing a potential upside of 53.8% from the current market price. Risks to the valuation include competition, economic weakness, and failure to meet cost-saving targets. The Company is focused on transitioning customers to platforms and driving software revenue growth to improve long-term profitability and margin expansion.
In 1Q24, NCR Voyix achieved solid sales across all segments, signing new customers and expanding with existing ones. The retail segment saw growth in software and services revenues, while the restaurant segment experienced an increase in payment processing services. The digital banking segment demonstrated strong financial performance, with growth in registered and active users. The Company also announced new appointments to strengthen its leadership team.
Looking ahead to FY24, NCR Voyix expects total revenues between $3.6 to $3.7 billion, with adjusted EBITDA margins expected to improve. The Company anticipates growth in software and services revenue, offsetting declines in hardware sales. The guidance does not include revenue associated with delayed Atleos country transfers. The FY24 free cash flow is forecasted to be between $155 to $185 million.
The EV/EBITDA valuation methodology places NCR Voyix’s intrinsic value at $21.00 per share, factoring in diminishing hardware revenues and slower software revenue growth. Sensitivity analysis shows that changes in adjusted EBITDA and EV/EBITDA multiples could significantly impact the intrinsic value. Overall, NCR Voyix is positioned for growth in its digital commerce business, leveraging its software-led model to transform, connect, and run global retail, hospitality, and digital banking operations.
