Q1 2024 Earnings Summary
- Brink's has strong competitive positioning in the AMS market due to its unique value proposition that optimizes the full value stream, offering customers both lower costs and improved reliability.
- The company has significant growth potential in DRS, with balanced opportunities among unvended customers, conversions from existing CIT customers, and expansions with existing DRS customers, indicating substantial room for growth as they are still in the early stages.
- Brink's is implementing initiatives to shorten sales cycles and improve efficiency, such as reorganizing sales teams to focus on specific verticals and improving contract and installation processes, which can accelerate revenue growth.
- The company's ATM Managed Services (AMS) market is still nascent and difficult to quantify, implying uncertainties in future growth and market share. The executive stated, "I'd say right now, it's still a pretty nascent market to try and quantify specifically."
- Challenges in shortening the sales cycle and converting deals due to factors "not completely in our control" may impact the company's ability to accelerate revenue growth.
- Lack of quantification on the migration of existing customers to Digital Retail Solutions (DRS) suggests that the transition to new services may be slower than anticipated. The executive admitted, "I wouldn't have that... But I can tell you we're still early innings in my view."
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AMS Growth and Opportunities
Q: How did AMS growth compare to DRS, and where are opportunities in AMS?
A: In the quarter, AMS and DRS had about the same growth split. There's significant opportunity in offering combined AMS and DRS solutions, especially in retail where they are complementary. Brink's unique position of providing both AMS and DRS services, unlike competitors, has led to wins in late last year and Q1. They also see continued interest from financial institutions in ATM outsourcing, with ongoing onboarding of bank networks in Europe. -
Competitive Position in AMS
Q: How is your competitive positioning in AMS and market share?
A: Managed Services is a nascent market, expected to expand as banks pursue outsourcing agreements. While it's challenging to quantify market share specifically, Brink's value proposition of integrating hardware and software solutions through their network allows for optimization of the full value stream. This positions them favorably in both competitive RFPs and direct negotiations with financial institutions. -
DRS Growth Drivers
Q: Can you quantify DRS migrations between new sales and conversions?
A: While exact numbers weren't provided, growth is balanced among three areas: unvended space (customers not currently using cash logistics services), conversions of existing traditional CIT customers, and existing DRS customers expanding their footprint. All three areas are active and a focus for the company. -
DRS Migration Progress
Q: How much of the existing book has migrated to DRS?
A: Specific quantification wasn't provided, but they are still in the "early innings" with significant opportunity remaining, particularly in the white space with larger unit volumes and location counts. -
Shortening Contract to Revenue Time in DRS
Q: What initiatives are shortening time from contract signing to revenue in DRS?
A: They've implemented significant changes, aligning contracts and internal PMO teams with the supply chain. This includes staging devices and integrating software layers to accommodate customers efficiently. Improvements also involve better coordination with legal teams and commercial negotiations. -
Shortening Pipeline to Contract Time
Q: Any initiatives to shorten time from pipeline to contract signing?
A: They've reorganized sales teams from geographic coverage to segment-focused verticals, enabling better understanding of customer needs and faster negotiations. They're also timing contracts to avoid conflicts with industry-specific events, such as avoiding installations during retail's peak seasons like Thanksgiving and Black Friday.