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Good day, and welcome to the NCR Atleos Q3 2025 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Melanie Skijus, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining the Atleos Third Quarter 2025 Earnings Call. Joining me on the call today are Tim Oliver, Chief Executive Officer; Andy Wamser, Chief Financial Officer; and Stuart MacKinnon, Chief Operating Officer.

During the call, we will reference our third quarter 2025 earnings presentation available through the webcast and on our new Investor Relations website at investor.ncratleos.com.

Today's presentation will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Risks and uncertainties include, but are not limited to, the factors identified in today's earnings materials and our periodic filings with the SEC, including our annual report.

During the call today, we will also refer to certain non-GAAP financial measures, which the company uses to measure its performance. These non-GAAP measures are reconciled to their GAAP counterparts in the presentation materials.

The webcast this morning is being recorded and will be available for replay by accessing our Investor Relations website.

With that, I will turn the call over to Tim.

Thanks, Melanie, and thank you to everyone for joining us on our call this morning. I will start this morning by quickly reviewing the quarterly operational performance and strategic progress from a more forward-looking and qualitative perspective. I'll leave the quantitative review to Andy.

I will then provide some context on the current business environment and its consideration in our outlook. I'll end by reiterating the compelling Atleos story and describing a capital allocation strategy that anticipates steady growth and free cash flow. And then Stuart, Andy and I will take your questions.

Having now passed the second anniversary of our spin from legacy NCR, our separation process is complete. The magnitude of the effort and of the accomplishment cannot be overstated. We bifurcated or duplicated 140 years worth of IT systems and hardware. We physically separated hundreds of global locations. We established dozens of new legal entities 100 critical customer connections and completed over 200 transition service agreements. I'm very pleased that the resources formerly dedicated to this effort can now be focused on growing Atleos.

From the outset, we described 2 fundamental goals that we knew would be essential to the eventual valuation of our company. First, establishing a quarterly pattern of transparent and predictable financial performance; and second, deploying free cash flow to reduce leverage and then begin returning free cash to shareholders.

In the third quarter, our seventh full quarter as a separate publicly traded company, Atleos extended a series of steady financials consistent with our expectations and our external guidance. The resiliency of both Atleos business model and its employees that drive it, augmented by prudent contingency planning have allowed us to overcome exogenous shocks like 50% import tariffs, persistently high interest rates, disrupted supply routes and dramatic shifts in immigrant work payrolls.

As we enter the fourth quarter, we have also crossed the originally targeted threshold leverage level of 3x and are on path to be at about 2.8x at year-end. While we were unable to repurchase shares in Q3 due to trading window restrictions, we expect to begin repurchasing Atleos shares in the upcoming trading window and to establish a 10b5-1 plan that dictates the repurchase program thereafter.

For those following along in the presentation from the Investor Relations website, I will start on Slide 5 that provides a quick visual of our vertically integrated self-service offering.

As digital transaction and asset types proliferate, the translation to and from physical assets becomes increasingly complex and is accelerating the outsourcing of self-service banking and the cash ecosystem. Banks and retailers are demanding more efficient and lower friction physical transactions at more capable devices and at convenient and safe locations beyond the branch.

Our service infrastructure and installed base of machines is purpose-built to solve these needs. We become essential to any transaction that requires physical authentication and the ability to dispense or accept or even safe keep valuable physical assets.

NCR Atleos is uniquely positioned to benefit from either of the 2 solutions, a shared financial utility ATM estate or outsourced bank-specific fleets. Both growth vectors leverage a common Atleos infrastructure that is world-class has unmatched global scale and delivers significant cost leverage.

Turning to Chart 6, which describes our Q3 performance against our qualitative and financial goals. The third quarter was an exceptional quarter from a strategic and competitive perspective. We grew efficiently by delivering robust hardware revenue that augments our leading installed base with record production from our manufacturing facility in Chennai. We drove incremental revenue from the global service fleet by accelerating our outsourced services business.

Our Service First initiative elevated service levels and is being recognized by our partners and rewarded by our customers. And we embraced simplicity, reducing inefficiencies across the company, optimizing our production and supply chain operations, redesigning the organization to speed decision-making and investing in systems and people to make us easier to do business with.

Core top line growth was 6%, led atypically but not unexpectedly by traditional hardware revenue and the conversion of services backlog. This growth was partially offset by lower payroll card transactions in the U.S. network business.

Profitability ramped nicely and was at the high end of our expectations due to an advantageous hardware revenue mix, accretive outsourced ATM-as-a-Service revenue growth, fixed cost leverage and direct cost productivity in our service organization. These were all partially offset by higher cash rental costs and higher tariffs.

Shifting to Chart 7, which describes the self-service banking segment. This is primarily a service business comprised of a global installed base of over 500,000 ATMs sold to financial institutions that run our subscription software and rely on Atleos servicing agreements for the duration of their deployment.

Traditionally, ATM services have been centered on maintenance and repair, but increasingly, banks are opting to outsource more or even all of the services necessary to run and manage their ATMs. We now have over 120,000 machines that we support beyond traditional break/fix, including those that are fully outsourced Atleos.

Segment financial performance was strong. Revenue grew an impressive 11% in the third quarter, benefiting from increased demand for our recycler product, coupled with acceleration in outsourced services. Services and software combined grew 5%. And ATM-as-a-Service was the primary source of services growth and continued to gain momentum with meaningful additions to total contract value to customer count and to backlog.

This segment generated significant profit growth with margins up across each hardware, software and services. Scalable services growth and advantageous hardware mix were augmented by indirect productivity efforts, all contributed to margin expansion.

Demand across the product portfolio and especially our recycler product has exceeded expectations. In early 2024, we launched an effort to strengthen our manufacturing capabilities to prioritize our engineering effort and to increase throughput for next-generation recyclers. This effort has now reduced our delivery lead times from months to weeks.

Demand for our ATM-as-a-Service is also strong and accelerating, posting 37% growth in Q3. We have streamlined the sales process and improved conversion rates, resulting in our best quarter ever for ATM-as-a-Service bookings, approximately $195 million of total contract value, including our first ATMaaS customers in Latin America and in the Middle East. Backlog remains strong in this business, and we expect the fourth quarter implementations to be the highest of the year.

Our Service First initiative is working. Already industry-leading service levels continue to trend upward in the third quarter. We completed our annual customer satisfaction survey in the third quarter, and the results showed an impressive 30% improvement in our Net Promoter Score from already solid scores in the prior year. We will use the detailed data from this survey to focus on areas that need improvement, and we'll follow up with every customer comment and request.

Our efforts to simplify how we operate are generating positive business outcomes. Following the successful test run of our AI-driven dispatch and service optimization model in Canada, we launched for all of North America in the second quarter. These AI tools have delivered meaningful improvement in both first-time repair and time to repair metrics through automated dispatching. We will roll these tools out in the U.K. and Europe in Q1, and we'll test a third AI tool in North America in 2026 that is focused on preventative maintenance.

Turning to Chart 8, summarizing the network segment. The Network segment is our utility banking business that consists of approximately 80,000 owned and operated ATMs in 13 countries that are placed in blue-chip retail locations where consumers can meet their regular banking needs. The network business continues to grow the number of network cardholders, the number of client financial institutions, the types of transactions resident on the machine and the geographies.

Similar to Q2, positive trends in surcharge-free transactions, cash deposits and TAP were more than offset by significantly lower payroll card transactions in U.S. cities with large migrant workforces and lower dynamic currency conversion transactions due to fewer international visitors.

The net result was an overall modest decline in segment revenue. These 2 effects seem to have stabilized at new levels in August and September. And that said, our rolling 12-month ARPU was up slightly, and our machine count grew to about 81,000 machines, offsetting the recurring reduction we've seen from pharmacy closures.

Growth in this segment typically results from expanding the number of cardholders, extending the footprint of the network or growing the transaction capability of the machines in the network. In Q3, Allpoint executed an important branding agreement with a top 10 U.S. bank and added deposit capability with the world's largest credit union.

Our emerging transaction types were equally successful. ReadyCode further expanded its presence in digital payments through an agreement with Coinme, and volumes from -- good workers are recovering quickly from a contractual pause. Cash deposits were up 90%, with particular lift from cap-based deposits.

Our newer fleets in Greece and Italy are outperforming expectations in these cash continue to build a pipeline of partnerships and integrations to increase transaction opportunities and volumes with a focus on fintech issuers and wallet providers.

And finally, on Chart 9, I summarize our investment thesis. First, our comprehensive portfolio is unique and allows Atleos to be indifferent to the self-service solution our customers prefer, whether there's a full outsourcing of traditional infrastructure or membership and access to a shared financial utility network.

Second, our scale is unmatched, enables world-class service and efficient incremental costs. Third, the outsourcing of the cash ecosystem and physical transactions by banks and retailers is accelerating, and we are the obvious choice to take on that work.

Fourth, we understand the importance of a new small-cap company like Atleos to establish a track record of consistency and transparency. 7 quarters in, our financial performance in every quarter has been very similar to our guided ranges. And finally, we expect to generate predictable free cash flow at steadily improving free cash flow yields sufficient to simultaneously improve our balance sheet and repurchase shares.

Before Andy walks you through the detailed results, I'd like to express my appreciation to the 20,000 strong Atleos employee base. If you subscribe to any of our social media channels, you know that our recently celebrated Atleos Brand Week highlighted a positive, dedicated and engaged global team. Our continued success is entirely due to our collaborative spirit and our collective effort. Together, let's close out a successful 2025 and carry momentum into 2026.

And with that, Andy, over to you.

Thank you, Tim. Building on Tim's comments, the company continued to drive strong performance in the third quarter, making good progress on our plans for the year, advancing our long-term growth strategy and delivering solid financial results.

The strong momentum we have built in ATM-as-a-Service, coupled with our robust hardware order book and sales pipeline, has us on track to meet our operating and financial objectives for the year.

Starting on Slide 11. I will focus my comments on core results for the third quarter as the Voyix-related business continues to wind down and impact comparability with the prior year period. As a reminder, Voyix-related comps have increasingly become less meaningful as we progress throughout the year. In 2026, the Voyix-related revenue will be negligible.

The key message in the quarter is that we are delivering strong financial results and successfully overcoming various macro-related impacts on our business. Results for the quarter either met or exceeded the upper end of our guidance ranges and included 6% core top line growth and a 7% increase in EBITDA, including 8% growth in the core business, strong margins and an impressive 22% earnings per share growth.

We achieved 4% growth in our services and software businesses, including an acceleration in ATM-as-a-Service growth of 37% year-over-year in line with our expectations. We achieved strong results with high recurring revenue alongside a second sequential quarter of versus recent years.

Strong growth in our higher-margin recurring businesses, coupled with productivity improvements drove adjusted EBITDA in the third quarter to $219 million, an increase of 8% year-over-year in our core business. The primary source of EBITDA growth was the self-service banking segment and was partially offset by a decline in the Network segment and a slight increase in corporate costs.

Adjusted EBITDA margin of 19.5% expanded approximately 40 basis points from the prior year with strong margin expansion for self-service banking, more than offsetting margin compression from the Network segment.

Net interest expense decreased $12 million compared to the prior year, benefiting from a lower debt balance, lower variable rates and lower credit spreads achieved in our credit facility refinancing late last year. The other income and expense line increased by $5 million year-over-year.

The non-GAAP effective tax rate was approximately 19% for the third quarter compared to 18% in the prior year. Non-GAAP fully diluted earnings per share increased an impressive 22% year-over-year to $1.09.

On Slide 12, we present our third quarter 2025 free cash flow reconciliation and strong financial position at quarter end. We generated $124 million of free cash flow in the third quarter, which was in line with expectations and supportive of our full year outlook. We expect to deliver a nice step-up in free cash flow in the fourth quarter as adjusted EBITDA increases sequentially and we recover investments in working capital.

Net leverage exited the third quarter at 2.99x and was an improvement of more than 0.5 turn compared to the prior year.

We made $20 million of debt principal payments in the quarter and finished under $2.9 billion of debt.

Our unrestricted cash balance was just over $400 million at quarter end and resulted in a net debt balance of under $2.5 billion. Based on our financial outlook and capital allocation priorities, we expect net leverage to be approximately 2.8x as we close out the year.

Turning to Slide 13. The self-service banking segment delivered exceptional financial results in the third quarter. Starting in the upper left, revenue grew 11% year-over-year and reached a new quarterly high of $744 million. The primary driver of top line growth was 25% growth in hardware deliveries, which reflects continued higher demand related to the industry refresh cycle and uptake of our recycler product.

Hardware demand remains robust and should drive another step-up in revenue in the fourth quarter. Our services and software businesses continued to generate healthy growth of 5% on a combined basis with banks increasingly outsourcing more services to us.

Moving to the chart on the top right, SSB grew adjusted EBITDA an impressive 21% in the third quarter to $196 million, also a new quarterly high. The key takeaway here is our ability to drive significant incremental profit through efficient, profitable growth and continuous productivity improvements.

Segment adjusted EBITDA margin expanded 220 basis points year-over-year to above 26%, with margins up across each line of business. This strong performance includes absorbing approximately $7 million of gross tariff impacts in the quarter.

Moving to the bottom of the slide, KPIs reflect healthy fundamentals of the business. On the bottom left of the slide, the mix of recurring revenue was 57% with recurring revenue still comprising a majority of the business, even with one of the strongest hardware quarters in recent years.

Annual recurring revenue, or ARR, was up year-over-year, reflecting the continued build in recurring services and software revenue from our existing installed base.

Next is Slide 14 and our ATM-as-a-Service outsourcing business. As a reminder, our bank outsourcing solutions business resides within our self-service banking segment. Advancing our customers through the continuum of ATM-as-a-Service to full outsourcing is a key strategic priority for the company. We break out primary operational metrics separately to help investors better understand and track our progress.

Starting at the top left of the slide, revenue grew 37% year-over-year to $67 million for the third quarter, led by 24% growth in unique customers and a favorable mix shift to North America, which is our highest margin geography. We also expanded to 2 new geographies in Q3, closing our first deals in Latin America and the Middle East.

The chart on the top right highlights the strong profitability of our ATM-as-a-Service business with gross profit up an impressive 65% year-over-year and gross margin up 700 basis points to 40%, benefiting from faster growth and margin expansion in [indiscernible].

Moving to the bottom of the slide, KPIs also demonstrate the positive trajectory of the business. On the left, ARR continues to build and was up 37% year-over-year to $268 million, and we are on track to exceed $300 million of annual recurring revenue as we close out the year. We finished the quarter with a strong backlog, up approximately 100% and the sales pipeline to deliver our growth target for the year.

On the right, you can see the healthy revenue uplift we generate from our ATM-as-a-Service business with third quarter average revenue per unit or ARPU of $8,300, which is well above segment and total company averages. The modest sequential downtick in ARPU for the third quarter was influenced by a higher mix of asset-light customers onboarded in recent quarters.

Such fluctuations are expected because the base is still relatively small, so variables like region, scope and timing of onboarding can impact ARPU for the quarter. Over the longer term, we expect this performance metric to trend upward from growth in higher ARPU regions like North America and Europe.

Moving to the Network segment on Slide 15. Segment revenue of $328 million was down 1% year-over-year. As we exit this year, we see positive fundamentals in the business, which is demonstrated by an increase in device count, an increase in new retail customers, deposit volumes and new geographies.

As we look at Q3 results, cash withdrawal transactions were approximately 4% lower than the prior year, with mid-single-digit decreases in the U.K. and North America. As mentioned in our second quarter call, North America continues to be impacted by several factors beyond our control.

An acquisition of one of ReadyCode's key digital payment partners, coupled with shifts in immigration policy have affected certain consumer segments. We continue to see lower utilization of prepaid payroll cards given certain government policies. Excluding those items, we estimate North America withdrawals would have grown low to mid-single digits.

In Q3, we expanded our presence in Canada with the addition of Access Cash. The asset added over 6,000 ATMs to our network fleet in one of our key markets. We have also seen an improvement in dynamic currency conversion transactions as travel to the United States began to recover and stabilize in the third quarter.

Additionally, our ReadyCode platform continues to attract strong interest from leading wallet providers, fintech innovators and money service businesses. In Q3, we successfully stabilized transaction volumes by onboarding several new partners, leveraging our seamless digital-to-cash and cash-to-digital capabilities. We also deepened our strategic Allpoint relationships, expanding access through key retail partnerships. As a result, we are seeing a solid rebound in transaction volumes, driven by our commitment to delivering surcharge-free access for gig economy users, unlocking value and driving sustained growth.

We generated strong top line trends from sources other than withdrawals, helping to diversify the business and support future growth. Our utility deposit network continues to gain strong traction with deposit volumes up 90% year-over-year and reaching an all-time high, clear evidence of market enthusiasm and a fundamental shift toward modern banking solutions.

Moving to the upper right. Adjusted EBITDA for the third quarter was $93 million. The year-over-year decrease in EBITDA was expected and was primarily due to a $9 million increase in vault cash costs resulting from the wind down of previous hedges and macro-related transactional headwinds. Adjusted EBITDA margin was 28% in the third quarter, and we are on track to maintain this margin performance in the fourth quarter.

The metrics at the bottom of the slide highlight key elements of our strategy. The chart on the left shows our last 12-month ARPU remained strong and continued to move higher by 2% year-over-year in the third quarter.

On the right, you can see our ATM portfolio finished the quarter at approximately 81,000 units, which is up both year-over-year and sequentially. We anticipate ATM network units will remain relatively flat as we close out the year, while we focus on driving new transaction types and other opportunities to monetize our fleet.

Turning to Slide 16 for our approach to capital allocation. Over the past 7 quarters, the company has demonstrated the ability to generate profitable growth and significant free cash flow. We continue to have a clear and compelling path to strong financial results with margin levers in the business providing outsized earnings growth potential and improved free cash flow conversion.

Our capital allocation priorities are focused and disciplined, continue to do business, pursuing strategic bolt-on acquisitions and returning capital to shareholders.

Our guiding principles remain consistent, a balanced approach designed to deliver the highest long-term value for our shareholders. As we exited the third quarter, we successfully achieved our net leverage target of below 3x, reinforcing the strength of our balance sheet and our financial flexibility.

We take a disciplined approach to investment opportunities, ensuring that both strategic innovation investments and bolt-on M&A meet rigorous return thresholds.

Reflecting confidence in the forward outlook of our business, you will recall that our Board authorized a $200 million share repurchase program that has a 2-year duration. In the fourth quarter, we will begin to repurchase our shares in the open market and also through a 10b5-1 plan.

With the capacity of our business to generate significant and improving free cash flow, we have unique flexibility to return capital to shareholders while at the same time strengthening our capital structure and investing for future growth. In short, we are confident in our ability to deliver predictable growth, disciplined capital deployment, improved free cash flow conversion and strong shareholder returns.

Moving to Slide 17 for financial outlook. Given solid third quarter results and positive momentum heading into the fourth quarter, we have reaffirmed the full year 2025 guidance ranges presented earlier this year. We have confidence we will deliver full year 2025 free cash flow conversion in excess of our 30% target.

Looking beyond 2025, we anticipate further improvement in our free cash flow conversion, approaching 35% of adjusted EBITDA over the next 12 months. This progress will be driven by continued margin expansion, particularly in recurring long-term services, monetization of our network ATMs, lower debt costs through recent and anticipated rate cuts and ongoing working capital efficiencies.

Concluding my comments, Atleos had a successful third quarter and sets us up well to achieve our plan for the year. We delivered solid financial results, had great operational execution and made progress on our key strategic goals to grow efficiently, prioritize service and embrace simplicity.

We are reaffirming our guidance ranges for 2025 as we effectively manage higher and uncertain tariffs and macro-related headwinds on our business. Our risk mitigation actions have been successful and are ongoing.

To put a finer point on the year with 9 months behind us, we are tracking toward the high end of our guided range for revenue given stronger hardware demand trends versus our original assumptions.

In line with our previously provided comments for adjusted EBITDA, we expect to deliver results at the lower end of the guided range. The adjusted EBITDA outlook reflects the impact of previously discussed tariff increases and broader macroeconomic pressures.

Finally, both adjusted EPS and free cash flow performance in 2025 continue to track at the midpoint of our original guidance with internal initiatives executed to reduce interest and tax expenses and as we benefit from working capital efficiency improvements.

We are moving into 2026 with confidence in our approach and our ability to drive continued profitable growth. With an unmatched platform of ATM solutions, we are focused on expanding our leadership and delivering significant value for shareholders.

With that, I will turn it back to the operator.

[Operator Instructions] We will take our first question from George Tong with Goldman Sachs.

You talked about how the network business was affected by lower prepaid card transaction volumes. Can you elaborate on how prepaid volumes played out during the quarter and exiting the quarter, if there were any improvements in trends seen?

Yes. Thanks for asking that question. They got better. So they stabilized at not great levels, but they've stabilized. They stopped getting worse. So I think those who are being paid differently or have chosen not to be paid at all and gone somewhere else to work, that effect has now stabilized, which means that, that downdraft should abate, and we expect to see this business return to growth in the fourth quarter.

Got it. That's helpful. And then can you provide an update on how you expect tariffs to impact the business in the fourth quarter and beyond?

Yes, that's a good question. We wish we did to answer that question. So here's what we've done. We scrambled to reduce costs and change where we ship some machines from to minimize the impact of tariffs this year. I think ultimately, the total impact of tariffs will be between, say, let's call it $25 million for this year.

Any changes to the tariff at this point, we're already halfway through the quarter would be, I guess, helpful and set a better stage for '26. There's expectations that the tariff rate that's currently at 50%, 5-0 percent will come down to something closer to 15% to 16% when negotiations with India result in a positive outcome.

We'll plan for next year at the 25% rate. Our budgeting process will presume a 25% rate, which would cause tariffs to be modestly higher year-over-year, so go from $25 million to $30 million. If it stays at $50 million, it's $20 million worse than that. And if it goes down to $15 million or $18 million, it's $10 million or $12 million better than this year. So there's a range of potential outcomes. I think the right place for us to be right now is presume a 25% number, which is right down the middle of what we've seen. But there's very -- we're very hopeful that we'll see something closer to 15% to 18% in the not-too-distant future. When we see that number, it will be helpful to march rate. I don't know, Andy, if you want to add anything to that?

No. I mean you hit the key points. So Tim is right, the gross tariff impact will be possibly $30 million for this year. I would say, though, that if you follow the news, which we do track, probably on an hourly basis that the expectation that something should be announced here imminently. And as Tim mentioned, it's in that 15%-ish range. So we will see, and we'll also see what the Supreme Court says.

But we presumed no change to the tariff rate in our guidance for the fourth quarter. We presume it stays [indiscernible].

We will take our next question from Matt Summerville with D.A. Davidson.

I want to ask one first on the network business. What percent of the transactional mix today is traditional withdrawals versus what it was 2 or 3 years ago? And can you talk about the relative profitability of withdrawal transaction sets versus non withdrawal as you try and expand beyond kind of that historical dependence on withdrawal?

Thanks, Matt. So remember that the transact -- withdrawal transactions in the United States have actually been a grower for us for a period of time. And the surcharge-free transaction volume has always been more than sufficient to offset the modest declines in surcharge transactions. The only thing that's changed in that dynamic because the surcharge fee continues to grow very nicely is this prepaid card.

The prepaid payroll card is down about 15% to 16% year-over-year, which translates into a downdraft on the business. The other parts of the world, we see withdrawal transaction volumes that are very strong, particularly in cash-intensive economies. The U.K. is an exception to that. The U.K. has been on a downward trend for the last 4 or 5 years, really even predating the pandemic. And so we continue to -- that hasn't changed. That's been the same for some period of time.

I think if you look at the Network business, approximately 75% of that business is U.S.-based. And so the phenomenon we're talking about would impact approximately 75% of the total revenue, if that's helpful. But Stuart, you want to add?

Yes. I address your second question sort of in terms of percentage of our revenue that is withdrawal-based versus the other factors we have in the network business, such as ReadyCode transactions, deposit transactions, branding and other revenue drivers, withdrawal transactions still make up the majority of the revenue in the high 80s, I would say. And -- but we're starting to every quarter, essentially offset that with -- you've heard about the 90% increase in deposit transactions. Those are our highest margin transactions and the ones that we are seeing the most demand for as banks look for alternate locations to serve their customers depending on their branch footprint consolidation activities.

Got it. And then as a follow-up to go over to self-service banking for a second. You threw a lot of numbers out there on the as-a-service stuff, and I want to make sure I kind of understand. So you're going to exit '25 ARR at $300 million or more. You had $195 million, I believe, of contract bookings. How does that -- what I guess would be the total as-a-service backlog? And early read, obviously, but where do you think based on all that TCV and bookings, where do you think the exit rate for '26 could look like for that business?

I think we're going to have another year of approximately 40% growth rate in that business. It's going to grow about 40% in the fourth quarter. You'll recall that we had hoped to have the machines come on a little more linearly this year than they did in 2024. They didn't. They were back-end loaded. We'll have a really nice ARR as we exit the year, which will, let's call it, lock in a lot of the growth that we were expecting in 2026. So think about a 40% growth rate in Q4 and a 40% growth rate in 2026.

And you'll remember that we hope this business -- at one point in time, we rolled this business out, we thought the growth rate might be higher than that. But what's been clear is the adoption rate has been not slower because of demand. Demand has been strong, but slower because of the time that it takes to both complete the sale and ultimately implement the solution. So we've rolled the devices onto the system, onto the as-a-service program a little bit slower than we would have liked. So we feel very good about backlog.

The $195 million, we probably should be doing something like that in most quarters. We're going to keep that 40% growth rate going, right? That number was $175 million last quarter. It's $195 million this quarter. It needs to grow with the business. That total contract value, if you divide that by 6, that's typical an average duration for a contract in there, that would give you a sense of how much that $195 million would impact the ARR going forward.

And Matt, maybe just one thing to emphasize is that growth of 37% is also coming with phenomenal margins. So the gross profit was up in 65% in the quarter, and we saw a gross margin expansion of 700 basis points. So I think the point there is not only is the backlog continuing to be strong, but it's also a very high-quality backlog in terms of what we're able to generate from a top line and then from a flow-through perspective.

Got it. And if I can just sneak one more in. What does the ARPU look like as a service backlog today? And how are you thinking about maybe pivoting over to the hardware side of the business? How are you thinking about the duration of the hardware cycle?

Sure. Yes. So I'll take the first question. So when we look at the ARPU in the backlog today, it's effectively flat from where we are for where we were for Q3. Some of that has to do with just timing of some incremental deals that we had in the APAC region, which is a little bit lower. But I wouldn't read too much into that. The sales team is doing a phenomenal job in terms of trying -- getting new contracts in NAM and EMEA. And so the backlog can change in terms of that average ARPU, but we are really confident in terms of -- Tim talked about the TCV that we signed up and the team is doing a great job building on to that.

Yes. And I'll take the second one because it's a really good story. We're going to put into service about 20% more devices this year than we did last year. We're going to sell 60% more recyclers this year than we did last year. We're -- the growth rates in our hardware business are even surprising us. That has a lot to do with terrific service levels from Len's organization that are wowing our customers has a lot to do with the really concentrated effort we made on recycler that Stuart led and the team pulled off nearly flawlessly. So I feel great about where we are.

I look at some of our nearest competitors, they've got relatively flat performance in hardware. I don't even know how to do that math. The market is very, very good. Bookings are very strong. Demand is high. And we expect that trend to continue into next year. Now at some point, we'll hit that -- this high level, but I anticipate hardware revenue being up again next year even on some very difficult comparisons. So we couldn't be more thrilled.

We don't like to talk about hardware around here too much. We obviously we're a service company. But when you can lock up these 5- to 7-year contracts on devices that are very lucrative for us beyond the hardware sale, we feel great.

So the mix is right. The profitability is strong. Sometimes we get a mix that's high in hardware. We see profitability go down because it's lower margin than the services side. The productivity we generated there and the price point on the devices we ship have all caused it to be more profitable than we would have thought. So taken all together, our hardware business is killing it right now, and I think it's going to continue.

[Operator Instructions] We will take our next question from Dominick Gabriele with Compass Point.

I guess when you're -- well, first, let's just stick with the recycler because it just sounds like that is becoming a larger and larger contributor. You talked about the 60% more recyclers just now. Is there any chance that you'd be able to give us an idea of how much revenue that makes up and what the revenue story is going forward on the recycler business? I have a follow-up, too.

I don't think I'll distinguish between the more traditional device, either the multifunction or just the dispense device. But we'll continue to give you the growth rates in the recycler, if you'd like.

I think remember that our growth rate is probably somewhat self-inflicted, right? We didn't ship as many machines from a recycler perspective, we would have liked to last year. And our competitive position wasn't as good as it needed to be. And I think what you're seeing this year to a certain extent is two things. One, our recycler is very, very good and performing exceptionally well. We're proud to put it into service, and we've got some of the larger banks choosing to go with our solution and getting our machines into their labs. So I think that matters a lot.

It's also true that larger banks are starting to buy a preponderance of their fleets as recyclers. There's just an underlying dynamic. They are fully bought into the recycler the upside associated or the upside associated with profitability and downside -- lower costs associated with putting recycler in place.

So I think it's twofold. One is we're doing a hell of a lot better job with our recycler product than we did a year ago. And secondly, our big bank customers are choosing recyclers nearly every time when they order new machines.

Great. I appreciate that. I guess if maybe you could just walk through some of the puts and takes and you talked about the tariff piece. But maybe even beyond that, can you talk about kind of the headwinds and the tailwinds, the puts and takes to adjusted EBITDA growth that were in 2025? Just trying to think about the trajectory of the business as we exit '25 into '26, given...

Yes. It's a very fair question, and I knew this is going to come up, right? It's time for you all to start to build models in 2026. And Andy would kill me if I started to talk about '26 guidance and so. So [indiscernible] into our budgeting process now.

I think whatever happens in tariffs, we'll figure out a way to absorb it like we did this year, we'll just -- we'll figure that out. We did it this year, we'll do it again. I have a hard time believing that tariffs will be much of a headwind next year, which suggests to me maybe they're a modest tailwind.

We will get lower interest expense next year. It's helpful to us. We've got -- every time they reduce interest rates by 0.25 point, we pick up what we pick up annually.

It's about -- well, if we think about just the U.S., we're talking about just the U.S. Fed. We about $2.6 billion in cash. So if you think about today, we've had 50 basis points, so that's -- cut that in half, that's $13 million on a full year basis, we get another point, again, just add another, call it, 6.5 or so.

Yes. It's hard to rely on those. We've built more into our budget for each of the last couple of years than we've actually seen. I'm hopeful we'll see one right. I mean they've always been a little later than we would have liked to, so you don't get the full year effect. But in general, thinking about '26, taking all that aside because it all seems to -- at least I think we've converted what were headwinds and tailwinds in each of those circumstances.

I think it's going to be a year a lot like this one. You're going to see 40% growth in ATM-as-a-Service. You're going to see terrific hardware numbers, more difficult comps in the second half of the year, but it will be really terrific. You're going to see a recovery in the network business that cost to start growing again in the fourth quarter and getting back to respectable growth rates as the year plays out. And I think in aggregate, you're going to see a growth rate from us is 4% to 5%. We're going to grow profitability twice that fast. We're going to generate more cash flow with convergence going from 30% to 35% or better next year.

So I think it's -- if you kind of use that as your construct to put the model together and think through kind of project forward what we're feeling this year, I don't think a lot is going to change.

And maybe actually, if you don't mind, maybe just one last one. The hardware sales in the quarter are obviously good for the quarter, but it feels like they set up the opportunity for a long-term contract effectively, right, through the life of the machine and there's knock-on effects from that device being put in place over the next multiple years. And so maybe could you just talk about given that the demand for your products seems to be increasing, how that could flow through the income statement and financial metrics in the kind of years to come, next 12 to 18 months?

Growing that installed base is the most important thing we're going to do this year. It is our right to sell software on a subscription basis and to service those devices for 5 to 7 years in duration, has everything to do with our ability to put them in place and a good customer who trusts us to do that for them.

So despite the fact we don't tend to talk about hardware very often because we're not a device company, we are a service company, but our service business relies on the success of the hardware business and relies -- our software business relies on the success of those devices. It's been very strong. Or to say it differently, when you miss on a device, you've missed on that revenue stream for 5 to 7 years, it's a very painful thing to do.

So yes, this is really, really important, and it's going to see -- when you see growth next year in the service revenue away from ATM-as-a-Service. You've got ATM-as-a-Service is just you're picking up more services around the same devices, you're also going to see growth in software and services associated with that fleet getting incrementally larger such that the software and service pull-through is stronger. So this is a very important year. And if this cycle of replacement continues to be strong, we believe that it will, it's a very good time to have people like your hardware because it's -- you're booking 5 to 7 years' worth of revenue. It's probably 4x the cost of the device itself.

We will take our next question from Antoine Legault with Wedbush Securities.

Just on the vault cash, you mentioned you have about $3.6 billion in vault cash. That obviously drives interest expense, and I appreciate that the Fed has been cutting rates and you benefit from that. But just thinking about that notional amount, do you have any ability to -- or discretion to flex that number up or down? Is that $3.6 billion sort of the right number? Could this be optimized further depending on network activity and quarters where activity is a bit lower? Just how -- is there anything to be done here or help me understand how that can work.

Yes. Just a quick -- it's $2.6 billion that we have sort of out in our machines around the world.

Total USD 2...

And that number has come down substantially over the last couple of years as we've implemented optimization. It's our biggest expense. So it's the area where we have the highest amount of focus in terms of optimizing efficiency. And it's one of the big drivers for ATM-as-a-Service as we take over a customer's fleet, we're able to optimize their utilization of cash and return capital back to them as well. So it's a number we're incredibly focused on, and we try to drive that number down every chance we get. So a combination of improved efficiency and lower interest rates next year will help the network as it returns to growth.

Stuart, what are the inputs of that algorithm to help us decide how much cash and how often roll trucks?

It's a combination of where the machine is. So some machines are harder to get to, so the drop cost is higher. combination of the vault that's getting to and obviously, a combination of the utilization of the machine. So we make decisions around whether we refill the machine weekly, monthly, biweekly, depending on the drop cost and then a combination of whether we have a recycler or a cash dispenser in there. If we have a recycler in that unit as we have been increasing our deposit taking network, that machine becomes increasingly more optimized and requires less visits and thus lower cash rates.

There are no further questions at this time. I will turn the conference back to Mr. Oliver for any additional or closing remarks.

Great. Well, thank you. This quarter looked at echo like the one that preceded it, and I suspect that the next one will be the same. We're making good, steady progress everywhere. We're winning more often than not. Our employees are performing exceptionally well. Our customer service levels are high and continue to get higher. It's very hard not to feel good about where this business is headed.

Hope that will translate into closing out a good year here in our fourth quarter. And then most importantly, probably give us good momentum going into 2026. We appreciate your time today. And I guess, happy holidays. We won't talk to you again until February. So an early happy holidays from the Atleos team on the call. Thanks a bunch. We'll talk to you again in 90 days.

This concludes today's call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the NCR Atleos Q2 2025 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Melanie Skies. Please go ahead.

Good morning, and thank you for joining the Atleos Second Quarter 2025 Earnings Call. Joining me on the call today are Tim Oliver, Chief Executive Officer; Andy Wamser, Chief Financial Officer; and Stuart MacKinnon, Chief Operating Officer. During this call, we will reference our second quarter 2025 earnings presentation, which is available on the Investor Relations section of our website at investor.ncratleos.com.

Today's presentation will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in today's earnings materials and our periodic filings with the SEC, including our annual report.

In our review of results today, we will also refer to certain non-GAAP financial measures. These non-GAAP measures are reconciled to their GAAP counterparts in the presentation materials. A replay of our earnings call will be available later this afternoon and can be accessed through our website.

I will now turn the call over to Tim.

Thank you, Melanie, and welcome to the Atleos team, first week on the job, which we right into an earnings release. We appreciate you being here, and we look forward to great things. Thank you to everyone for joining our call this morning. I'll start by quickly reviewing the quarterly operational performance and strategic progress from a more forward-looking and qualitative perspective, I'll leave the quantitative review to Andy. I will then provide some context on the current business environment and its consideration in our outlook. I'll end by reiterating the compelling Atleos story and describing a capital allocation strategy that anticipate steady growth and free cash flow. I'll be back after Andy's review to take your questions.

For those following along in the presentation posted to the Investor Relations website, I'll start on Slide 5. In the second quarter, our sixth full quarter as a separate publicly traded company, Atleos reported another solid quarter relative to financial metrics and delivered an exceptional quarter from a strategic and competitive perspective. We grew efficiently by delivering robust hardware revenue that extends our leading installed base and drove incremental revenue from the global service fleet by accelerating our outsourced services business.

Our Service First initiative elevated service levels to new all-time highs and is being recognized by our partners and rewarded by our customers. And we embrace simplicity, reducing inefficiencies across the company, optimizing our production and supply chain operations, redesigning the organization to speed decision-making and investing in systems and people to make us easier to do business with.

The exceptional effort across the company translated to strong financial results. Revenue was $1.1 billion. Core top line growth was on pace with our plan led a typically but not unexpectedly by traditional hardware revenue and the conversion of services growth backlog. This growth was partially offset by lower cardless payroll transactions in the U.S. and by lower TNC segment revenue.

Profitability ramped nicely and was at the high end of our expectations due to an advantageous hardware revenue mix accretive outsourced ATM service revenue growth, fixed cost leverage and direct cost productivity, particularly in our service organization. These were all partially offset by higher cash rental costs and higher tariffs. Considering NCR Atleos solid first half results, we continue to believe our full year 2025 guidance is appropriate. Backlog that supports both multiyear high traditional ATM deliveries and strong ATM outsourced service growth coupled with cost productivity momentum should together be sufficient to offset lower cardless transactions in the network business and persistently high interest rates that impact our cash rental costs. Shifting to Chart 6, which describes the self-service banking segment. This is primarily a services business comprised of a global installed base of over 500,000 ATMs sold to financial institutions that then run on our subscription software and rely on the Atleos servicing agreement for the duration of their deployment.

Traditionally, ATM services have been centered on maintenance and repairs, but increasingly, banks are opting to outsource more or even all of their other services necessarily run in ATM. We now have over 120,000 machines that we support beyond traditional brake fix, including over 33,000 that are now fully outsourced to Atleos. Segment financial performance was strong. Revenue grew an impressive 9% in the second quarter, benefiting from increased demand for our recycled product, coupled with acceleration in outsourced services. Services and software grew combined 5%.

ATM as a Service was a primary source of services growth and continued to gain momentum with meaningful additions to total contract value to customer count and to backlog. This segment generated significant profit growth with margins up across each hardware, software and services. The higher margin hardware mix and services growth augmented by productivity initiatives contributed to the margin expansion. We also continue to make good progress on our 3 objectives for 2025, which I'll remind you are: grow efficiently, prioritize service and embrace simplicity. From a growth perspective, product innovation efforts are allowing our products to compete exceptionally well. Demand across the product portfolio and especially at the recycled product has exceeded expectations.

Accelerating demand in the simultaneous relocation of the preponderance of our manufacturing and assembly to a singular plant, how to challenge our logistics organization, but their diligent efforts allowed us to make every delivery commitment in the second quarter, and they stand ready for a further ramp in the second half of 2025. While we consider a self-based services company, growth in our hardware installed base catalyzes future period success. After 8 years running the ship share leader in our collective ATM markets. In 2024, we moved into the first position for installed base and expect to extend that lead in 2025.

We will increase the number of machines that we put into service in 2025 by almost 20% over what was a solid year in 2024. Demand for our ATM outsourcing services was also strong and accelerating. We streamlined the sales process and improved conversion rates, resulting in our best quarter ever for ATM as a Service bookings. $177 million of new total contract value, including several orders for enterprise-level customers, and in new geographies, including ING Spain, the State Bank of India and Bank National Canada. Our Service First initiative is working. Already industry-leading service levels continue to trend upward in the second quarter, setting another new high and further enhancing customer satisfaction.

Over the first half of the year, customer health scores have increased by 160 basis points. The happier customers are buying more. Our efforts to simplify how we operate are generating positive business outcomes. Following the successful test run of our AI-driven dispatch and service optimization model in Canada, we launched this product for all of North America in the second quarter. These AI tools are delivering improvement across their service performance metrics and are already allowing over 65% of our total dispatches in those regions to be scheduled without intervention.

Now turning to Chart 7, summarizing the Network segment. The Network segment is a utility banking business that consists of approximately 80,000 owned and operated ATMs in 13 countries placed in blue-chip retail locations where consumers can meet their regular banking needs. The network business continues to grow the number of network cardholders, the number of client financial institutions, the types of transactions resident on the devices and geographies. While second quarter trends for both transaction types and regions increased both year-over-year and sequentially, lower dynamic currency conversion due to less international traveling and lower U.S. prepaid card transactions in cities with large migrant populations resulted in an overall modest decline in segment revenue.

We do anticipate both of these be transitory and temporal rather than trends. Adjusted EBITDA margin rate was on budget but decreased year-over-year due to the known expiration of interest rate hedges on our vault cash rental costs that were put in place at the time of the Cardtronics acquisition. Growth opportunities and investments in this segment typically expand the footprint of the network or the transaction capability of the machines in the network.

In Q2, we welcomed the return of 7-Eleven locations to our Allpoint Network and activated the first 1,000 locations for FCTI for processing. We will also deploy 5,000 Atleos devices backed by our service and support into the 7-Eleven U.S. fleet with the rollout beginning in the fourth quarter. More recently, we announced that we will add convenience retailer cases and their 2,900 locations for surcharge-free transactions for our 75 million cardholders at Allpoint, and we added 6,500 ATMs in the access cash brand in Canada.

Our new transaction types performed well. Ready Code further expanded its presence in digital payments through an agreement with in comp payments, providing additional cardless use cases for the ATM. And cash deposit transactions grew 170% in for the first half of the year in our U.S. retail portfolio. We continue to build a pipeline of partnerships and integrations to increase transaction opportunities and volumes with a focus on fintech issuers and wallet provider.

Flipping to Chart 8, I will use this as a backdrop to restate our strategy and illustrate our unique position. In separating from legacy NCR through a spin transaction in late 2023, Atleos is now a pure-play independent company with a leadership position in self-service banking and a clear growth strategy. In a global environment that continues to demonstrate steady cash-based consumer transactions and a stable installed base of ATM hardware, our growth will come from generating more revenue for every Atleos device that we support. Whether that's been providing high quality and more efficient and more comprehensive services to our financial institution clients, or by driving more transaction volume across our own network machines. Both of these strategies are fueled by our customers' desire to improve financial access for their customers, while also outsourcing more of their cash ecosystem. And NCR Atleos is uniquely positioned to benefit from either solution, a shared financial utility estate or an outsourced bank-specific fleet.

Both vectors leverage a common Atleos infrastructure that has unmatched scale and is world-class. And finally, on Chart 9, I summarize our investment thesis. Our separation is done, our TSAs are completed, and we have no new commercial agreements with our former sister company. Nearly 2 years since our launch road show, the key tenets of our value creation strategy remain unchanged. Our strategy and the investment to support that strategy is supremely focused on the ATM and on physical to digital transaction types. Over the past 6 quarters, we have launched our innovation efforts and reclaimed our leadership position, we've expanded our installed base. We've grown our capabilities.

We've returned to best-in-class service levels and engaged our global employee base and the service first culture. We've also improved our balance sheet and are about to cross a critical milestone of being under 3x net leverage. With free cash flow projected to ramp considerably over the next several years, and net leverage expected to drop below 3x in the third quarter of this year, we believe a more balanced approach to capital allocation that favors the highest incremental ROI is now appropriate.

To that end, the NCR Atleos Board of Directors has authorized a $200 million share repurchase program with a 2-year duration. On nearly every measure and every multiple, I believe our company remains undervalued relative to our industry and relative to our peers. And as the return of the shares repurchased at these levels is very compelling. We plan to execute on the repurchase program in the [indiscernible] 51 plan, while also driving further reductions in net leverage and pursuing small bolt-on acquisitions that are accretive and reduce net leverage.

Before I hand off to Andy, I want to thank our 20,000 employees all over the world for their dedication to our company, dedication to each other, and to our customers. Their service first bias is driving our success and their unrelenting effort allowed us to deliver yet another strong quarter for the company. We will continue to be innovative to drive impactful outcomes and to lead our industry from the front. The separate duration transaction is now behind us. Our balance sheet continues to improve, and our outlook is very bright.

With that, Andy, over to you.

Thank you, Tim. Building on Tim's comments, the company continued to perform well in the second quarter, making good progress on our plans for the year, advancing our long-term growth strategy and delivering solid financial results. The strong momentum we've built through the first half of the year, coupled with our robust hardware order book and sales pipeline, sets us up well to meet our operating and financial objectives for the year.

Importantly, over the past 6 quarters, the company has demonstrated the ability to generate profitable growth and significant free cash flow, which has enabled us to reduce financial net leverage from 3.7x at the time of the split from legacy NCR to approximately 3.1x at the end of the second quarter. Our confidence in the company's ability to continue growing profit and free cash flow in conjunction with good visibility into reaching net leverage of approximately 2.8x as we close out the year supports shifting to a more balanced approach for capital allocation.

Given the company's current valuation and significant incremental earnings power, repurchasing our shares offers 1 of the most compelling value-enhancing uses of our capital. So we are pleased to announce that the board has authorized a $200 million share repurchase program that represents approximately 10% of our current market capitalization. The repurchase authorization has a 2-year term. Moving forward, our goal is to continue to invest in the business and balance share repurchases with further debt reduction at a pace that optimizes sustainable shareholder value creation.

Starting on Slide 11, I will focus my comments on core results for the second quarter. Because of the wind down of VOC related business impact comparability with the prior year period, Note that [indiscernible] related comps will continue to be less meaningful during the second half of the year. The key message you should take away from this slide is that we delivered solid second quarter financial results, with mid-single-digit core top line and EBITDA growth, margin expansion and high single-digit EPS growth, all within or above the upper end of our outlook.

For revenue of just under $1.1 billion grew 4% year-over-year with 3% growth in our services and software businesses, including acceleration in ATM-as-a-Service growth. Hardware was up 18% year-over-year, in line with our expectations, which drove 3% growth for the first half of the year. We demonstrated continued progress in our services focused growth strategy with recurring revenue streams accounting for over 70% of total revenue in the quarter.

We achieved strong results with high recurring revenue alongside 1 of our best quarters for hardware sales in recent years. Strong growth in our higher margin recurring businesses, coupled with good early progress on productivity initiatives drove 4% growth in adjusted EBITDA to $205 million. The primary source of EBITDA growth was the self-service banking segment, partially offset by a decrease in network EBITDA, which was expected and a slight increase to corporate costs. Adjusted EBITDA margin of almost 19% expanded approximately 40 basis points from the prior year, with strong margin expansion for self-service banking, more than offsetting margin compression from the Network segment.

Below the line, net interest expense decreased $9 million compared to the prior year, benefiting from a lower debt balance, lower variable rates and lower credit spreads achieved in our credit facility refinancing late last year. The other income and expense line improved by $3 million year-over-year. The non-GAAP effective tax rate was approximately 26% for the second quarter compared to 17% in the prior year. Non-GAAP fully diluted earnings per share increased an impressive 9% year-over-year to $0.93.

We generated modest free cash flow in the second quarter due to ongoing investment in working capital to support another step-up in hardware deliveries for the third quarter. Turning to Slide 12. The self-service banking segment delivered exceptional financial results in the second quarter. Starting in the upper left, revenue grew 9% year-over-year and reached a new quarterly high of $733 million. The primary factor that drove the top line strength was 21% growth in hardware deliveries, which reflects higher demand related to the industry refresh cycle, uptake of our recently upgraded recycler products and the anticipated shift towards the second quarter for our first half order book.

Hardware demand remains robust and should drive another step-up in revenue for the second half of the year. Our services and software businesses continued to generate healthy growth of 5% on a combined basis. With banks increasingly outsourcing more services to us. We estimate that the impact of deferred hardware revenue related to new ATM as a service agreements was approximately 130 basis point headwind on on second quarter revenue growth.

Moving to the chart on the top right, SFB grew adjusted EBITDA an impressive 20% in the second quarter to $189 million, also a new quarterly high. The key takeaway here is our ability to drive significant incremental profit through efficient, profitable growth and continuous productivity improvement. Segment adjusted EBITDA margin expanded 240 basis points year-over-year to almost 26% with margins up across each line of business. Tariffs had a gross impact of approximately $5 million in the quarter.

Moving to the bottom of the slide, KPIs reflect the healthy fundamentals of the business. On the bottom left of slide, the mix of recurring revenue was 57%, with recurring revenue comprising the majority of the business, even 1 of the strongest hardware quarters in recent years. Normalizing for hardware volumes, we estimate the mix of recurring revenue would have been 60% in Q2. ARR was up year-over-year, reflecting the continued build in recurring services and software revenue from our existing installed base.

Next to Slide 13 and our ATM as a Service outsourcing business. As a reminder, our bank outsourcing solutions business resides within our self-service banking segment, advancing our customers through the continuum of ATM outsourced services towards full outsourcing is a key strategic priority for the company. We break out primary operational metrics separately to help investors better understand and track our progress. As previously mentioned, we will continue to evolve how we discuss the outsourcing business in the coming quarters for better comparability with industry reporting practices.

Starting at the top left of the slide, revenue grew 32% year-over-year to $62 million for the second quarter, led by 25% growth in unique customers and a favorable mix shift to [indiscernible], which is our highest margin geography. We also expanded to a new geography in Q2, closing our first deal in Spain. The chart on the right highlights the strong profitability of our ATM outdoor services business. With gross profit up 72% year-over-year and gross margin up 900 basis points to 40%, benefiting from faster growth and margin expansion in NMR, our most profitable region.

Moving to the bottom of the slide, KPIs also demonstrate the positive trajectory of the business. On the left, ARR continues to build and was up 32% year-over-year to $249 million. We finished the quarter with a strong backlog and sales pipeline that puts us on track with our growth targets for the year. On the right, you can see the healthy revenue uplift we generate from our ATM as a Service business with second quarter ARPU of 8,300. The modest sequential downtick in ARPU for the second quarter was influenced by a higher mix of asset-light customers onboarded in recent quarters. Such fluctuations are expected because the base is still relatively small for variables like region, scope and timing of onboarding can impact ARPU for the quarter. Over the longer term, it should continue to trend upward from growth in higher ARPU regions like North America and Europe.

Moving to the Network segment on Slide 14. Second quarter results were at the lower end of our expectations. Segment revenue of $320 million was down 2% year-over-year on a reported basis. Digging into business results, cash withdrawal transactions were approximately 4% lower than the prior year, with mid-single-digit decreases in the U.K. and North America. As Tim noted, North America was impacted by several factors beyond our control, disruption in 1 of Ready Code's key digital payment partners, coupled with shifts in government policy have affected certain consumer segments. As Tim mentioned, we've seen a decrease in dynamic currency conversion transactions as fewer people are traveling to the United States and also lower utilization of prepaid payment cards given certain government policies.

Excluding those items, we estimate North America withdrawals would have grown low to mid-single digits. On a positive note, our ready code solution continues to garner interest from a variety of wallet, fintech and money services providers. Several new participants are in the process of coming live. We expect Ready Code to return to growth in the coming months as these new partners such as Incom aggregate programs and funnel existing transactions to self-service.

Additionally, we've completed certifications for our ATMs in South Africa, and we're seeing strong growth of 13% year-over-year in the region, driven by a mixture of product and operational enhancements. We generated strong top line trends for sources other than withdrawals, helping to diversify the business and support future growth. We continue to see strong momentum across our utility deposit network as deposit volumes were up 170% year-over-year with volumes exceeding $1 billion of annualized deposits for the first time. Moving to the upper right, adjusted EBITDA of $86 million was at the low end of our expectations. The year-over-year decrease in EBITDA was expected and was primarily due to a $12 million increase in vault cash costs resulting from the wind down of previous hedges and macro-related transactional headwinds. Adjusted EBITDA margin was 27% in the quarter.

The metrics at the bottom of the slide highlight key elements of our strategy. The chart on the left shows our last 12 months average revenue per unit continues to move higher sequentially and was up 3% year-over-year in the second quarter. On the right, you can see our ATM portfolio finished the quarter at approximately 77,000 units, which is flat sequentially. Looking forward, we expect the number of ATM network units to increase in 2025 through the addition of both retail partners and geographies.

Slide 15 presents a trending product-centric view of our results. This helps visualize how the complementary nature of our businesses creates a company that operates in attractive, growing and highly profitable markets. Most notably, it reinforces that Atleos is primarily a services business that generates recurring streams of revenue and profit. Second, the trend demonstrates that our strategy is working. Our services and software businesses have accelerated coupled with the solid momentum in hardware revenues fueling top line and profit growth. The consistent performance in our transactional business reaffirms the resilience of our business strategy.

As a reminder, the other Voyix operations represent legacy NCR Voyix exited geographies and commercial agreements between Atleos and NCR Voyix. We expect business results to continue to decline in these non-core operations. On Slide 16, we present a reconciliation of our second quarter free cash flow and a snapshot of our financial position at quarter end. We generated $15 million of free cash flow for the second quarter, which includes investments in our inventory to support our robust hardware delivery that is scheduled for the third and fourth quarters and is consistent with our outlook for the year.

We expect to generate significant free cash flow in each of the remaining quarters as adjusted EBITDA progressively builds in the second half of the year. Net leverage was 3.1x in the second quarter and was down approximately half a turn compared to the prior year. We made $20 million of debt principal payments in the second quarter and finished with $2.9 billion of gross debt. Our unrestricted cash balance was just under $360 million at quarter end and resulted in a net debt balance of $2.5 billion. Based on our financial outlook and capital allocation priorities, we expect net leverage to be below 3x in the third quarter.

Moving to Slide 17 for financial outlook. Given our solid second quarter results and positive momentum heading into the third quarter, we've reaffirmed the full year 2025 guidance ranges presented earlier this year. For the third quarter, we expect consolidated core revenue to grow in the mid-single-digit range. The Voyix related impact on top line should diminish further in the third quarter and result in low to mid-single-digit growth for the total company. We expect self-service banking revenue should grow mid- to high single digits, benefiting from approximately 20% year-over-year growth in hardware and positive top line growth for services and software.

We expect network revenue will be flat year-over-year with growth in the core ATM network business, offset by lower Liberty crypto revenues. Adjusted EBITDA is projected to be between $210 million and $225 million, with margins in the mid-20s for self-service banking, high 20s for network and high teens for TNT. Below-the-line interest expense should be similar to Q2. Effective tax rate is expected to be approximately 25% and share count of approximately $75 million. Putting the pieces together, we expect adjusted EPS to be in the range of $0.95 to $1.10. We expect free cash flow to meaningfully step up in the third quarter. As a reminder, the midpoint of our free cash flow guidance was $280 million, and we expect a 40%, 60% split between quarters 3 and 4.

Concluding my comments, Atleos had a successful second quarter and first half of the year and sets us up well to achieve our plan for the year. We delivered solid financial results, had great operational execution and made progress on our key strategic priorities to grow efficiently, prioritize service and embrace simplicity. We have reaffirmed our guidance for 2025 despite continued tariff uncertainty and macro-related transactional headwinds and have developed plans to mitigate risks. We move into the second half of 2025 with confidence in our approach and ability to drive profitable growth with our unmatched platform of ATM solutions for our customers, which will ultimately translate to shareholder value.

With that, I will turn it back to the operator.

[Operator Instructions] We will take our first question from Matt Summerville with D.A. Davidson.

A couple of questions. Can you talk about with respect to the as-a-service business, what the average ARPU is in the as-a-service backlog and how that's trending. And speaking of backlog, can we put a finer point or some level of quantification on the as-a-service backlog. And then I have a follow-up.

Yes. It's Thanks, Matt. North of $9,000, I think it's $9,100 of ARPU in the backlog, that moves much like, of course, it does in the installed base, right? It depends on the mix that's in there, but it's a very lucrative mix, a little bit of asset light in there, which means that you don't get the top from the hardware sales has come up front. But north of $9,000, it's $9,100. And I think we're north of [ 8,000 ] units at this point in backlog. So a really good quarter. As I said, it's our best quarter from a bookings perspective since we started this initiative some 2.5 years ago.

Yes. And just to add, I mean, that backlog of 105% up year-over-year. That really does set us up well for the balance of this year and then gives us momentum into '26 as we continue to expand this product offering.

And then in your prepared remarks, Tim, you made the point to talk about some of the achievements you've had in the services side of the organization. Can you put a finer point on that? And any sort of metric quantification. I remember you said 160 basis points, but I don't actually know what metric you're actually using there. And then relative to the stock price and the share buyback announcement, given where you're at $32, $33, how would you expect Atleo's relative out of the gate aggressiveness to look with repo?

Yes. Let me take the first one. So on a performance perspective, we've got a steady climb back to our leading levels of service performance since the separation, you recall that back in October '23 and really through January or February of '24, we got ways to frustrate our customer base. We were taking 2 service organizations that were comprised in many regions by generalists do fixed equipment across both businesses and netting down to single specialist organizations. And we just -- we didn't have people in the right places sometimes we let machines on repair. The biggest problem at that point in time was our outlier machine. So on average, our service levels were okay, and probably we're still at the top of the pack. But we had a lot of outliers need would sit for days without getting prepared, which is a big irritant to our customers. We're well back. The effort was was used by the service organization. We are fully separate now in nearly every region. We supply a little bit of support to Voyix. They don't supply in to us any longer from a service perspective. And we shifted entirely to specialists rather than generalist.

We measure an NPS score annually, and then we update that with pulse surveys at the midpoint of the year, at least once a year, those pull surveys came back incredibly strong as pull surveys, we go out to only those who were detractors in the previous survey and asked 1 question, are we getting better? And the answer in the most recent survey was emphatically, yes. So -- and that's not just on service, right? Those questions go out a lot of different things. You can -- one of the things that most of irritated customers going back a year or so ago was our invoicing capability was we had convoluted invoices. And so we're working on every aspect of customer service. And right now, they're all getting better.

On the repo, repos are hard to predict exactly when you're going to do that. Look, I think in the low 30s here, there's a no brainer that we buy back as much stock as we could. Remember, they were only allowed to buy in certain circumstances. We can buy in the uptick. We can only represent a certain percentage of total volume in any given day. And we will operate under a plan. Otherwise, we can only buy in our open windows, which are relatively short, but really only give you, let's call it, 3 months out of the year to be able to repurchase that wouldn't be effective or efficient. So we'll put a 10b5-1 plan in place. I don't know exactly what that will be structured like now. But it will have -- it will accelerate purchases at lower stock prices, it will allow us to take more advantage of days. We have significant disconnects in our valuation or our performance relative to the rest of the market.

We've had several in the last couple of months that on no news, the stock traded, let's call it erratically less an elegant trading by others, say, created buying opportunities, we just weren't there to buy. So I want to make sure that we're under 3x levered to before we start. And -- but we'll work with the legal department to get the 10b5-1 plan in place as quickly as possible and start buying back shares. We're we're very pleased the Board allowed us to get this authorization in place, and we'll use it very wisely. I think $200 million over the next 2 years. If cash flow -- free cash flow plays out the way you think that it will. I don't think we'll need 2 years. I hope that helps.

We will take our next question from Dominick Gabriele with Compass Point.

Really good results and really excited to hear the capital return for sure. I know you've been waiting to get the approval and investors have been waiting to jump in when they see something like this. And so it really seems to me, Tim, that you're moving really beyond the spin now, right? You're shedding your old skin, the business is starting to accelerate in many ways, and you're really starting to transform the business. And so there's a lot of investors, I think, that are going to revisit this name. So if you could just give us kind of your 2- to 3-year vision as you see it today given some of the developments in the quarter and over the last 1 or 2 quarters, I think that would be really excellent. I just have a follow-up, if you don't mind.

Yes. separation is messy and it's hard -- it's a lot harder than value venue. We have a lot to get done to just get a foundation under us to mature as a company and the leadership team and to make sure that our customers were comfortable with the new NCR Atleos. We're there. And I think this quarter, the results -- the quarter results were great as we live 90 days at the time as a public company, I get that, but far more important was the huge progress we made competitively. We're winning every work in, and we're winning more than our fair share. And we're winning -- we're getting the benefit of down from our customers, and they're giving us more service revenue.

And so I would take 90-day financial results for the kind of strategic results we just posted every day. And I think that if you hear confidence from Andy and I today, it's because it's working and our customers see it. And the model we put together is 1 that it takes advantage of really the most unique portfolio of capabilities of anybody in our space. No 1 else can win both ways. If an economy wants to go to a totally shared financial utility called a network of devices like some -- like maybe New Zealand has done. We're there to help. We got it. We know how to run networks. We can run them better than anybody in the world because we run the biggest 1 in the world.

If on the other hand, economies wanted to continue to have lots of banks like the U.S. does and have each of those banks have their own fleet we can help out there as well. We know we can run fleets for most of our bank customers more efficiently perhaps than they can and more effectively than they can. We want to be able to do that for them. That traditional model has worked incredibly well. They worked really well this quarter. So I don't think anyone else wins both ways, and that's what makes us feel good. We go to the customer and say, "We'll give you a hybrid approach. You tell us what you want your footprint to look like, and we can optimize that for you across the entire spectrum.

Our vertical integration is to proving out to be a huge asset for us because all of those new machines we bring on either from a service perspective or we add to the network, are incredibly inexpensive to run to leverage the fixed cost leverage and the leverage off of our fleet and installed base is very, very powerful. It allows us to expand margin or generate incremental margins on that new revenue that are much higher than the average margin of the company and accrete.

And then lastly, we knew when we went out on the road and talking about this business, it could and should generate predictable and high free cash flows. Those would not become evident until we get a few quarters away from the separation because of cash costs associated with the separation and some other things we needed to work through. We're right now able to invest back into our business from an innovation and growth perspective, and reduce debt and now repurchase shares. We've got our strategic flexibility back. We've got our balance sheet flexibility back we'll still continue to reduce the debt. And it's a good practice. We'll keep getting it down further.

I don't know whether we get down to 2.5x what the ultimate threshold is, but we'll have the opportunity over the next several years to redeploy that cash flow to drive all 3, which I think at this point now, with our leverage at about 3x, all 3 of those can accrete good value to all of our constituencies, customers, shareholders, bondholders and employees. Hope that helps.

Absolutely. It feels like the leverage target actually jumped the quarter has brought forward a little bit to get below 3x too, if I remember right. And so that's really positive. And I guess -- the only thing I was curious about I think there is a misconception when investors just first look at this company that were and that's just not the case. And so I think what some people worry about is some of the India impact when you see the tariffs from 25 to 50. But just remind over all the hardware really is and kind of what those impacts are from the change in tariffs.

Yes. Look, hardware is an $800 million business for us. And we say all the time, we will never distinguish ourselves on hardware. There'll be service that we distinguish ourselves up. That said, and I think I said it in my prepared remarks, that installed base is probably the most powerful thing about our company. And in every period of time that you can extend the installed base and put a device into service that will pay you for the next 5 to 7 years, either by the transaction or by the month, you want to make sure that, that happens. And the reason we're so excited about hardware right now is not because it's pushing revenue growth currently is because it feels like we're taking share, and it feels like we're growing our installed base, and that's super important to future period success.

But it is only $800 million of revenue for us. we've gone out of our way to co-locate all of our manufacturing in India. India is a great market for us. We have over 6,000 employees in India, and we had manufacturing just 4 or 5 years ago in 5 or 6 locations. We have swing capacity in Europe and swing capacity in Mexico that we can utilize if necessary, to manage down tariffs ticket out of line. Look, I don't anticipate a 50% tariff in India lasting for the long haul. It won't affect our third quarter because most of our stuff are already on the water, in the fourth quarter would be a modest impact that we had then deal with it. If it stays at 50%, we'll find a different solution. I don't think that it will.

And I also think that tariffs won't drive competitive differentiation, meaning all of us procure our parts from other parts of the world. There's very few people stringing wiring harnesses or stuff in printed circuit boards in the United States currently, and I don't anticipate that happening. It's also true that if you subsegment how you're manufacturing to fairly much, you lose scale, you lose scale pretty rapidly. I don't believe there's enough demand for our product inside the U.S. to make it worthwhile to open an assembly plant here in the United States. And even if I did, you'd only save the tariff on the 30% or so of the cost to build associated with the labor content in that device. So we spend a lot of time thinking about this. We have, for many years, not about the right manufacturing footprint for us that includes cost of use supply chain costs as well, localization of supply chain and transportation costs.

We will adjust if we have to. I don't know where it's going to go. Nothing is permanent yet. I think that India is an incredible partner for the United States. I think that ultimately, the 2 sides will figure something out. I perfectly fine at 25% is still the best place for me to manufacture. I can prove that out. And I'm still competitive. So will the deal with that when the time comes for the third quarter, don't change for the fourth quarter. We'll have stuff on the water that gets us through the first month of that fourth quarter. So I'm really not -- this is not a 2025 issue [indiscernible] it will be coming 2026 and 2027 issue, and we would act to make sure that we have net effects to offset the gross tariff. I hope that answers your question.

We will take our next question from George Tong with Goldman Sachs.

Your ATM as a Service business saw a 32% revenue growth in the quarter from an increase in unique customers and high ARPU geographies. Can you elaborate on how sustainable this growth is and how you expect the growth drivers to evolve over time?

Yes. Great question. I would say, first off, in terms of thinking about the sustainability, I think the first thing to look at is just look at the year-over-year backlog that we had. I mean so it's up 105%. I think as we talk to customers more and more in terms of about our product portfolio and our services offering. I think we are seeing a real validation into this full agent of the service portfolio or solution. So as we think about ATM as a service up 32% in Q2, we expect that to accelerate further into Q3 and Q4. And certainly above 40% plus rates for the balance of the year. And when you look at the backlog, it really -- it bodes well in terms of thinking about that continued growth even potentially higher for '26.

So I would tell you that every week, we get new, I'll call it, deal reviews in terms of looking at different proposals from customers and the pipeline in terms of the activity we're looking at, it is robust. So we have a lot of high yield confidence in terms of what the outlook is for that growth business for this year and certainly beyond.

Got it. That's helpful. And then do you expect the network business to see managed units swing back to positive growth on the full year basis. Can you talk about how much of this growth you expect to come from new partners that you signed versus a stabilization of unit declines from existing retail partners?

Yes. I think there's still a little bit of decline in the pharmacy space to go, but it's going to be dwarfed by the new machines that we're adding on. So I feel good about where that number is going. As you know, the ARPU has been growing more quickly than the device declined because we have seen growth in the -- particularly in Allpoint network in the United States for some time, but the most recent deals with 7-Eleven and with Casey's and the addition of devices in Canada, I think, all bode very well for the fleet size. And I also think that some of those new entrants of the new partners in the network business have fleets that actually augment where we are.

So it's adding density places where we needed to add density cases is often in more [indiscernible] locations. The Canadian devices, I think we have room to increase the density of devices in Canada. So in most urban populations in the United States, we don't need more devices in the access points we're adding now pretty terrific.

And George, the only thing to add is sure. And the only other thing I had relates to the network businesses. As we think about Q3, we do see sequential improvement with that business. We think Q2 is really the low point in terms of certainly where we see profitability, we absorbed all the [indiscernible] kit. And so we're now sort of a steady state there. But as I talked about in my comments and Tim just with the new partners that were going to different transaction types that are being added, we certainly expect sequential improvement in network, particularly in EBITDA next quarter.

We will take our next question from Antoine Legault with Wedbush Securities.

Just 1 for me in terms of the refresh cycle. Are you seeing any anything new in terms of customer demand, given the windows kind of end of life coming up in October. Has there been anything on that front that you can speak to?

Yes. So it will not be that phenomenon that cause people that order more devices this year and next, the devices since the force migration in 2019 of Windows 10 that we and our banks make sure will never be caught in that situation again. So there's no forced device upgrades caused by the next change in Windows. What you're seeing is a lapping of the huge hardware years that all of us who manufacture devices experienced in 2019, those machines are aging out. They're hitting their 5- to 7-year duration. And so you're seeing some modest uptick in hardware revenue just because of what I call normal refresh cycle that sign way is up for sure, and it's -- we're benefiting now. It would not explain, however, all of the upside that we're seeing in the hardware business. I think there's 2 other reasons. One, we're winning more often than in the past. We're winning more than our share in most business we feel great about that.

The other is there is an upgrade associated with the capability of the device. So it's not a forced migration by the underlying software but rather for operating system, but rather by the capability of the device, whether it be recycling or multipurpose devices, whether it be the capability device around different transaction types and TAP and all the rest. You are seeing more demand for more expensive and more capable devices around the world. And we're -- I think you're going to see the look and feel of the device over the next, say, several years, change pretty dramatically as people decide that it's not just about the screen size anymore of rather about how people interact with the machine. So there is definitely demand for hardware that's associated with change, but probably not the change of the operating system.

We will take our next question from Chris Senyek with Wolfe Research.

Solid quarter. Could you talk about the trends you're seeing in ATM as a Service heavy versus asset-light deals? I know there has been a mix change a little bit in some of the past quarters? And then if you could break that out U.S. versus international, that would be super helpful. And then I have a follow-up question.

The asset-light product is primarily a developed world, North America, Western Europe opportunity. the asset-heavy deals more often are in place where the machines cost less and the ARPU per device is somewhat lower. So I think India Brazil, the mix, as you can see by the ARPU and the backlog is relatively strong from a North American and Europe perspective, which will bode well for a better mix of asset-light deals. It's also true that Andy and his team have finally after many quarters of trying, have found a way to finance some of these devices off of our balance sheet nonrecourse financing, which is really helpful from an asset-light perspective.

Great. And then a question on margins and came into them, given the mix of of more hardware stuff in the second quarter. How should we be thinking about the margin cadence in the back half of the year and as we exit 2025?

Yes. So if we think about next quarter, I would say you're probably going to see an uplift in SSB, just continue to grow with as a service, even though it's going to offset some of the kind of the strong hardware growth. I expect year-over-year sequential decline -- or actually or sequential improvement in network year-over-year decline just given the fall cash at [indiscernible], you'd be up modestly and you saw that again in terms of the results we posted in Q2. And then as we think about Q4, we'd expect continued sequential improvement really driven by the same things in terms of continued SSP is going to continue to step up as we move throughout the balance of the year, and that's going to drive a lot of the margin.

Pagain, this SSB business really is the recipient of most of our productivity initiatives -- and those are going very well. Our service organization, we talked about some of the AI to other things rolling out. This is a good old-fashioned Six Sigma total quality, however you want to describe it, is just productivity and those productivity initiatives. I think on a net basis, we're looking to deliver $40 million or $50 million worth this year on a gross business, gross basis closer to $100 million. those are on plan and working and they accelerate in the second half of the year. So it also gives us a really good uplift. It is interesting that we're posting improved margins when our mix is more heavily weighted to hardware that is somewhat counterintuitive to how you perceive our business. But when you get the volumes of devices that we've seen and you get the right mix of devices, it can be at least accretive to what the hardware profitability was in the prior period, and that's what we've seen. .

We'll take our next question from Shlomo Rosenbaum with Stifel.

This is James Holmes on for Shlomo Rosenbaum. I just wanted to take a deeper look at ATM as a service gross margin. It continues to be really strong with margins up 900 bps year-over-year. Is there anything in the backlog that could impact the margins going forward, such as a large deal in India or any other geography? And what can the margins in this segment reach sustainably?

So in my comments, I talked about in terms of the margin profile can change based on the scope, the region and really, frankly, the number of devices. When we think about this, I'll say, the flow-through in terms of revenue [indiscernible] 32 and the gross profit being up 74, that margin is really healthy. It's really going to change and sort of evolve, but we expect it to continue to grind higher, particularly with -- as we get more neighbor deals are deals on in North America down. So we're looking at opportunities all around the globe and the rent are attractive opportunities everywhere. But we expect this margin for a while to continue to go up as we continue to get more productivity we launched this product offering globally.

I think what Andy was saying is do not expect 72% drop, 39% revenue right? [indiscernible] mix. What it does describe is a business that is entirely scalable. And the conversion on those incremental service dollars is exceptionally high. It may not be as exceptionally is it just was in the quarter to just pass, but it will remain exceptionally high. And that's the beauty of this model is that you should see profitability grow well in excess of revenue. And that revenue growth rate, as somebody asked earlier, right, is going to be north of 30% for a long time to come.

And maybe just a quick follow-up. Regarding network EBITDA margin, what level of interest rates are incorporated into the guidance? And what is the segment sensitivity to any potential interest rate touch going forward?

Yes. So I would say, if we think about the -- the ball cash flow operate anywhere between solus 70, 90 basis points when we think about the debt that we borrow. If you want to think about simplistically, about potential rate cuts. So if you had -- you all [ $3.8 billion ], you had a 1 point decrease in sober rate is $38 million. So if you had a forward curve, that book, that said that there could be forecast over the next, call it, 1 year, 1.5 years, that will be a benefit towards just pure profitability. So [indiscernible] Tim and I can't tell you when the fed's going to cut and what the pace of that cut is going to be. But we certainly think the outlook should be positive in terms of what our [indiscernible], this should be a low point in terms of where our all cash cost should be and should certainly improve as we look to the outer years.

Yes. And when we put this plan together, we anticipated 4 cuts this year for a full point. And of course, as you know, we've not seen them. So we've absorbed that into our guidance, and we're figuring out how to cover that, but it would be a 1 full point across the year, assuming it was played out across the year would have been half of $38 million or $19 million pickup for us. So we found ways to cover that. But in future periods, when those rates come down, we should see some nice lift in EBITDA.

We will take a follow-up question from Matt Summerville with D.A. Davidson.

I'll be quick here. I just want to make sure I understand within the network business, can you out the impacts of the couple of dynamics you pointed out at Ready Code being 1 of them that weighed on absolute withdrawal volumes this quarter and when you expect withdrawal volumes to accelerate in absolute terms.

Yes, the Ready Code -- the pause in the Ready Code growth associated with the an acquisition and then reagreement is about $2 million in the quarter. And the...

The DTC increased [indiscernible] actually about $2 million to $3 million in aggregate. So that was responsible for in addition to the [indiscernible] cash.

I think we're concerned with the cardless payments. Some, let's call it, the immigrant intensive economies in Louis States is -- we don't think it got worse at the end of the quarter. And so we don't know where it goes from here. The others -- we suspect that things will adjust, and they always do. But we have to be cautious in our expectations for that, and we're going to find other ways to offset that or in anticipation of that being a little bit more persistent problem may be playing out through the third quarter. We'll go find other ways to to get back some profitability in that business. But the ready-to thing is ready to be fixed and the other, we're watching carefully.

And just the other thing I'd add is -- I said in my comments, we fully expect Ready Code to ramp over the next few months with partners like Income. And as Tim mentioned in his comments, just with STI cases and others, that business, we have plans to recover.

All other vectors of growth feel great in that business. We always get a modest U.S. unanticipated change in consumption and and paying an [indiscernible], and we'll have to settle back in.

I think we've hit time, but I want to keep people past if we could help it, operator, thank you for your help today. quick summary. A great quarter, a good quarter from a reported financial results and KPIs perspective, an exceptional quarter when it comes to our competitive positioning and our strategic progress. We we're very pleased to be able to say that our separation transaction is in the review mirror is 1 of you. It does look good to make that statement. It was a longer path perhaps than any of us knew, and we're very glad to be here. The confidence that our board showed in us to allow us to approve a share repurchase program suggest that they believe like we do, that we are going to generate strong free cash flows at our company for many quarters and years to come. And then the call on that capital, this is not a capital-intensive business to call that capital will not be high, and we'll be able to continue to get it back to both shareholders and debt holders over the next several quarters and years. So thank you very much for your interest. We appreciate your time very much, and we'll talk to you again in 90 days.

This concludes today's call. Thank you for your participation. You may now disconnect.