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NCR Q2 Earnings Surge 130% Y/Y, Cardtronics Buyout Boosts Revenues

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NCR Corporation (NCR - Free Report) reported second-quarter 2021 results on Tuesday, wherein the non-GAAP earnings came in line with the Zacks Consensus Estimate, while revenues surpassed the same. The company’s quarterly non-GAAP earnings of 62 cents per share came in line with the Zacks Consensus Estimate and soared 129.6% year over year on higher revenues and cost reductions.

The company’s revenues of $1.68 billion topped the consensus mark of $1.62 billion. The top-line figure also increased 13% year over year on a reported basis, mainly driven by revenue contribution from the recently-acquired Cardtronics business, along with solid growth across the company’s banking, retail and hospitality segments.

Quarter Details

Banking revenues increased 6% year over year to $809 million, primarily on higher software and services revenues, partially offset by lower ATM hardware sales. Cardtronics contributed $32 million to the Banking division’s revenues, representing an approximately 4% increase to the segment’s top-line growth.

NCR Corporation Price, Consensus and EPS Surprise

NCR Corporation Price, Consensus and EPS Surprise

NCR Corporation price-consensus-eps-surprise-chart | NCR Corporation Quote

Retail revenues increased 19% to $576 million, chiefly on growth in point-of-sale and self-checkout revenues across its food-drug-merchandise and convenience-fuel-retail customers.

Hospitality revenues grew 34% to $215 million, primarily driven by an increase in point-of-sale revenues across the company’s enterprise and small-and-medium business customers.

The company’s Digital Banking Solution continued witnessing solid momentum, with revenues increasing 8% year over year to $129 million. Digital banking registered users climbed 11%, year on year, to 26.2 million.

Margins

Non-GAAP gross profit of $472 million was up 23.9% year over year. Non-GAAP gross margin expanded 240 basis points (bps) to 28.1%, primarily driven by higher revenues and improved productivity, partially muted by elevated supply-chain costs.

Non-GAAP operating expenses flared up 12.8% year on year to $299 million, chiefly due to the company’s planned increase in research and development costs related to higher strategic investments.

Non-GAAP operating income increased to $173 million from the year-ago quarter’s $116 million. Non-GAAP operating margin expanded 250 bps to 10.3% from the year-earlier quarter’s 7.8%.

Other Financial Details

NCR ended the June-end quarter with cash and cash equivalents of $449 million compared with the $319million reported during the March-end quarter.

Free cash inflow totaled $142 million compared with the prior quarter’s $160 million. Net cash provided by operating activities was $155 million during the second quarter. During the first half of 2021, the company generated operating and free cash flows of $310 million and $235 million, respectively.

Zacks Rank and Key Picks

NCR currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Microsoft (MSFT - Free Report) , Cadence Design Systems (CDNS - Free Report) and Texas Instruments (TXN - Free Report) . While Microsoft sports a Zacks Rank #1 (Strong Buy), Cadence Design and Texas Instruments carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Microsoft, Cadence Design and Texas Instruments is currently pegged at 11.5%, 11.7% and 9.3%, respectively.