NATL Q2 2025: ATM-as-a-Service backlog +105% to 8,000 units
- Strong ATM as a Service performance: Management highlighted that the backlog is over 8,000 units with an average ARPU in the backlog exceeding $9,000 and noted a backlog that’s 105% up YoY. This demonstrates a robust recurring revenue base and strong long‐term contract quality that can drive scalable, high-margin growth.
- Enhanced service performance and operational improvements: The executives discussed significant strides in customer service, driven by the implementation of AI tools and a shift to specialist service teams. This improvement in service levels—reflected in higher customer health scores and margin expansion—supports a sustainable and profitable growth model.
- Expanding network partnerships and geographic coverage: New deal additions with key partners such as Seven Eleven and Casey’s, along with increased network penetration internationally, bolster the network segment. These initiatives are expected to offset declines in legacy sectors, improve device density where needed, and drive incremental revenue and margin expansion.
- Network business headwinds: The Q&A revealed concerns that the network segment is facing pressure from lower withdrawal volumes—driven by reduced dynamic currency conversion and lower prepaid transactions—which, if persistent, could negatively impact overall revenue and margins.
- Tariff and supply chain uncertainties: Management acknowledged potential risks from escalating tariffs (e.g., concerns about a 50% rate in India), which, although representing a smaller portion of total revenue, could squeeze hardware margins and complicate supply chain logistics if the situation does not improve.
- Capital allocation and execution risks: Concerns were raised about the execution of the share repurchase program amid market volatility and regulatory constraints (such as limited trading windows under a 10b5-1 plan), which could delay or reduce the effectiveness of the planned capital return.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Core Revenue Growth | FY 2025 | no prior guidance | Mid-single-digit range | no prior guidance |
Adjusted EBITDA | FY 2025 | no prior guidance | $210 million to $225 million | no prior guidance |
Adjusted EBITDA Margins - SSB | FY 2025 | no prior guidance | Mid-20s | no prior guidance |
Adjusted EBITDA Margins - Network Segment | FY 2025 | no prior guidance | High-20s | no prior guidance |
Adjusted EBITDA Margins - TNT Segment | FY 2025 | no prior guidance | High-teens | no prior guidance |
Effective Tax Rate | FY 2025 | no prior guidance | Approximately 25% | no prior guidance |
Share Count | FY 2025 | no prior guidance | Approximately 75 million | no prior guidance |
Adjusted EPS | FY 2025 | no prior guidance | $0.95 to $1.10 | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | Midpoint of guidance is $280 million with a 40%/60% split between Q3 and Q4 | no prior guidance |
Consolidated Core Revenue Growth | Q3 2025 | no prior guidance | Mid-single-digit range | no prior guidance |
Self-Service Banking Revenue Growth | Q3 2025 | no prior guidance | Mid to high single digits, benefiting from 20% YoY growth in hardware and positive growth in services and software | no prior guidance |
Network Revenue | Q3 2025 | no prior guidance | Expected to be flat YoY, with growth in the core ATM network business offset by lower Liberty crypto revenues | no prior guidance |
Adjusted EBITDA | Q3 2025 | no prior guidance | $210 million to $225 million | no prior guidance |
Adjusted EPS | Q3 2025 | no prior guidance | $0.95 to $1.10 | no prior guidance |
Free Cash Flow | Q3 2025 | no prior guidance | Expected to meaningfully step up in Q3 | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
ATM-as-a-Service | Q4 2024 showcased 24% YoY revenue growth, increased customer count, growing ARR with a strong backlog. Q3 2024 reported 23% YoY growth with an 8,000‑unit high-value backlog and improved ARPU. | Q2 2025 highlighted accelerated growth at 32% YoY with a 105% increase in backlog, improved ARPU, and significant margin expansion. | Accelerated growth with enhanced profitability and market expansion. |
Operational Improvements | Q3 2024 focused on margin expansion via productivity initiatives and AI tools for cost reductions. Q4 2024 emphasized over $100 million in cost savings, EBITDA growth and margin expansion through operational efficiency measures. | Q2 2025 demonstrated the implementation of AI‑driven dispatch and specialist service teams, leading to over 65% automated dispatches, productivity gains and further margin expansion. | Enhanced operational efficiency with a stronger emphasis on AI and specialist teams improving service levels and margins. |
International Expansion | Q3 2024 detailed expansion into Greece and prework in Italy with new banking and retail partnerships. Q4 2024 noted growth in network partnerships (e.g., with Chime) and increased Allpoint transactions across geographies. | Q2 2025 presented new market penetration with partnerships including 7‑Eleven, Casey’s, Canadian Access Cash and certifications in South Africa. | Broader and more diverse international partnerships, deepening market penetration into both new and underrepresented regions. |
Network Segment Challenges | Q3 2024 mentioned minimal issues with a slight decline in managed units that was offset by high transaction volumes. Q4 2024 discussed managed units being rationalized, rising vault cash costs, and pricing pressures. | Q2 2025 disclosed challenges of modest declines in managed units, pricing pressures affecting cash withdrawal volumes, though offset by strong deposit transaction growth. | Increasing challenges in certain areas (e.g., pricing pressures and managed unit declines), while new partnerships help mitigate the negative impacts. |
Capital Allocation | Q3 2024 discussed a focus on reducing net leverage with potential share buybacks once targets were met. Q4 2024 emphasized debt paydown and mentioned contemplating buybacks after reaching leverage goals. | Q2 2025 provided clear guidance with a commitment to a $200M share repurchase program via a 10b5-1 plan, demonstrating disciplined capital allocation alongside free cash flow generation. | A more structured transition toward shareholder returns with a clearly articulated repurchase program, balancing debt reduction and buyback execution. |
Tariff & Supply Chain Uncertainties | Q3 2024 did not include any discussion on this topic; Q4 2024 noted limited tariff exposure via spare parts and highlighted inventory build‑up measures. | Q2 2025 detailed rising tariffs in India (from 25% to 50%), consolidated manufacturing operations in India, and strategies (e.g., alternative sourcing in Europe and Mexico) to mitigate impacts while maintaining improving hardware margins. | Increased focus on managing tariff risks and supply chain uncertainties with proactive mitigation strategies compared to minimal prior discussion. |
Hardware Refresh Cycle | Q3 2024 described the aging of 2019 hardware, with expectations that the refresh cycle (5‑to‑7 years) would drive significant revenue growth in 2025–2027. Q4 2024 characterized the refresh as modest currently, with potential revenue boosts in coming years. | Q2 2025 attributed current hardware revenue uptick partly to the normal refresh cycle, combined with successful competitive bids and demand for upgraded device capabilities such as enhanced functionalities. | Consistent long‑term revenue driver with evolving device capabilities and competitive wins suggesting a steady future contribution to revenue growth. |
Emerging AI Tools & Specialist Teams | Q3 2024 had no dedicated discussion on this topic aside from a brief mention of leveraging AI for margin improvements. Q4 2024 did not mention AI tools or specialist service teams. | Q2 2025 introduced a distinct focus on deploying AI‑driven dispatch models and transitioning to specialist service teams that significantly enhance customer service and operational efficiency. | New topic emerging with potential for large impact on customer service quality and operational productivity, representing a notable strategic shift in Q2 2025. |
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Share Repurchase
Q: How will share buybacks be executed?
A: Management explained they’ve authorized a $200M share repurchase program via a 10b5-1 plan to take advantage of lower stock prices and maintain leverage below 3x. -
ATM Service Metrics
Q: What is the ARPU and backlog size?
A: They reported an ARPU of over $9,100 in the backlog and noted a sizable backlog exceeding 8,000 units, which has grown 105% YoY. -
Service Improvement
Q: How have service metrics improved?
A: Management highlighted a 160 basis point uplift in customer health scores, driven by streamlined specialist teams and enhanced service processes. -
Growth Sustainability
Q: Is 32% revenue growth sustainable?
A: They expect ATM as a Service growth to accelerate beyond 40% for the remainder of the year, supported by a robust pipeline and strong new partnerships. -
Asset Mix & Margins
Q: How do deal types affect margins?
A: The team noted that asset‐light deals in developed regions deliver higher ARPU, while asset-heavy deals in emerging markets yield lower margins; overall, ongoing productivity initiatives are boosting margins. -
Interest Rate Impact
Q: How sensitive is network margin to rate cuts?
A: They indicated that a 1% decline in interest rates could boost profitability by roughly $19M, though definitive timing on rate cuts remains uncertain.
Research analysts covering NCR Atleos.