Good day and welcome to the NCR Corporation Third Quarter Fiscal Year 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Michael Nelson, Vice President of Investor Relations. Please go ahead, sir.

Good afternoon and thank you for joining our third quarter 2018 earnings call. Joining me on the call today are Mike Hayford, President and Chief Executive Officer; Owen Sullivan, who joined NCR three months ago as Chief Operating Officer; Andre Fernandez, who joined NCR two months ago as Chief Financial Officer; and Frank Martire, Executive Chairman. Before we get started, let me remind you that our presentation and discussion will include forward-looking statements. These statements reflect our current expectations and beliefs, but they're subject to risks and uncertainties that could cause actual results to differ materially from those expectations. These risks and uncertainties are described in our earnings release and our periodic filings with the SEC, including our Annual Report. On today's call, we will also be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in the presentation materials and on the Investor Relations page of our website. A replay of this call will be available later today on our website, ncr.com. With that, I would now like to turn the call over to Mike.

Thanks, Michael, and thank you, everyone, for joining us today for our third quarter 2018 earnings call. I will begin with some of my views on the business before turning it over to Owen, who'll provide an update on our operational improvements, and then Andre will review our finance performance during the quarter. And Owen, Andre, Frank, and I will take your questions. We'll begin on slide 3 with a brief overview of our financial and operating performance. Our third quarter results were largely in line with our expectations and we continue to focus on improving operational execution. Two areas of strategic emphasis we've noted are expanding our recurring revenues and driving cloud revenue growth. During the quarter, recurring revenues increased 2% which represent 48% of total revenue, while cloud revenues were up 6%. Also, the consistent implementation of our M1 initiative is driving further margin expansion in services as gross margin reached 26.8% in the quarter, up 70 basis points compared to last year. Improving our margin profile in services will remain a key priority. Last quarter, we spoke about a number of critical areas where NCR needs to improve in order to elevate the value we offer our customers. We are addressing those execution challenges and we will provide an update of our progress in a few minutes. We've also been hard at work redesigning a manufacturing network and alleviating supply chain constraints. Our success to date has us on pace to deliver a meaningful increase in ATM production during the fourth quarter. In addition to our previously announced M1 initiatives on services and our manufacturing restructuring plan, we have identified additional cost savings opportunities that are expected to result in at least $100 million of savings in 2019. Andre will cover this in more detail in his…

Thank you, Mike. Moving to an update on our efforts to redesign our manufacturing network on slide 6, we continue to take necessary actions related to our manufacturing and distribution network as we execute on our strategy to accelerate our transformation to a software- and services-led company. Since my arrival, I've had the opportunity to visit our facilities in Nashville, Columbus, Mexico and Budapest. During those visits, I met with our new third-party partners, Jabil, on the manufacturing side and CEVA on the distribution part of our business. Our progress across the network has been significant and I am confident we will achieve the benefits we set out to accomplish. To-date, the team has delivered on key milestones. First, we recently opened a new third-party logistics warehouse with CEVA to help facilitate improved distribution and optimize our supply chain and logistics flow. Second, we have begun a significant ramp of our manufacturing production with Jabil in Chihuahua and USI in Guadalajara. The benefit to be received with these third-party partners is the ability to shift from a largely fixed cost structure to a more variable structure, thus mitigating our P&L exposure to hardware demand cycles. Both these partners have increased their production and are on track to deliver to meet our fourth quarter demands. With the closing of our Beijing plant as well as two additional facilities by year-end, we will deliver overall improvement in our global utilization rates. The supply chain constraints related to the ATM 80 Series have largely been resolved. We are significantly ramping production to meet the stronger-than-anticipated demand our 80 Series has generated and are working through our increased backlog. Overall, we've made steady progress on our hardware transformation initiatives. Our focus now needs to heighten as we execute on these initiatives beginning in the…

Thank you, Owen. On a personal note, it's great to be here at NCR, and I look forward to meeting many of you both at our upcoming Investor Day on November 7, as well as in the coming weeks and months as we lay out our strategic direction for the business. Moving first to slide number 9. In my first 60 days in the role, our management team and I have spent a significant amount of time analyzing our business and cost structure and optimizing our spend. As you already know, our M1 initiative in our Services business has resulted in solid top-line and margin performance in that segment. Our hardware network redesign is also making significant progress, as Owen discussed. The initiatives we are taking in our manufacturing operations, while adversely impacting 2018, will result in a more efficient operation, and improved profitability in our Hardware business in 2019. In addition to these efforts, we recognize that both our SG&A as well as our overall operating expenses have increased as a percentage of revenue. In response, we have identified additional cost reduction opportunities in nonstrategic areas in our corporate functions and in sharply curtailing discretionary spending across the company. While we are still finalizing the impact, we expect these actions will generate at least $100 million of annualized savings in 2019 with some of that savings beginning here in the fourth quarter. On a cash basis, we expect the costs to be in the $75 million to $100 million range, which will be paid in both 2018 and 2019. As you've seen in our earnings release and I'll discuss again later, we've lowered our free cash flow estimate for the full year 2018 in part due to the expected cash usage in association with these actions. Now, having reviewed…

Thanks, Andre. In summary, we are making clear progress executing on our key priorities, while also addressing a supply chain constraint. In addition, the acquisitions of JetPay and Zipscene will expand markets for NCR and our solutions, improve our software and services revenue mix, and also help drive higher recurring revenues. On the manufacturing side, we are working to improve our cost structure, while also fulfilling the strong outstanding demand for our ATM 80 Series. We will continue to emphasize cash flow generation and execute our balanced capital allocation strategy with targeted M&A. I'm pleased with the success we've made to-date. However, much work remains to be done. The passion and commitment of the entire NCR team is second to none. And together, we will continue to serve our customers, deploy innovative solutions that drive business outcomes and improve our cost structure. Thank you for your time. And now, Owen, Andre, Frank, and I will take your questions.

Thank you. And we'll take our first question from Dan Perlin of RBC Capital Markets.

Hey, guys. Good evening. So, I had a couple of questions, if I could. The one starts with managed services, in particular, around the community banks. Are you already seeing impacts from the product that you rolled out, I want to say, maybe three, four, or maybe a month ago?

Yeah. On just supporting the banks in terms of servicing and outsourcing their back-office you're talking about?

Yeah. Well, you had – part of the strategy was kind of create this, as you called it, a bundled solution for digital banking, managed services for community banks as well, and then obviously once you fix the ATM issue, you could probably bundle that together. And I thought that I saw you guys put out a release a few weeks back where you were already introducing kind of a managed services solution for community banks. And I was wondering if they were already seeing signs of biting (25:37) on that or not.

Yeah. I think that's a good point, Dan. We're bundling together where we can the service component along with the hardware and along with, obviously, the software for community banking. So, we've announced that. We're getting a little bit of traction. I don't think we've seen the numbers really start to tick up yet in that area, but I think we're excited not only in banking, when we start bundling the service, but we obviously had a lot of success in the retail side. And we'll plan to do the same thing in hospitality going forward.

Okay. On the JetPay acquisition, is this the – the idea that you're going to be able to connect that to the Aloha solution, but also in other parts. So, I'm thinking NCR Silver and other parts of the retail. And I think in the past, there has been a slide, you didn't put it out, Mike, but predecessors did, where I think they said volume that NCR generated was about $120 billion in payment flows. And I'm wondering, are you expecting to be able to capture that much and is that still a good number?

Well, we'll update you on the number. So, I'm not sure I'd use that one, in particular. I think the number might – could be even bigger if you look at the totally. So, clearly, Aloha, where we're very sticky in the restaurant space and have a big market share to fully integrate the merchant acquiring with JetPay at the back end of that. And again, our strategy will be to really make that tightly coupled with the uniqueness of the front-end POS that we have on the enterprise software. So, we'll do it with Aloha, we'll do it with Silver, we'll do it with products like (27:19) in the convenience store. We'll do it in the retail space. I think our plan will be wherever we have very strong penetration with the front-end enterprise software in a retailer or in hospitality, we'll connect the payments and then settle through the backend on the merchant side. So, we're pretty excited about it. We obviously have some work to get it up to speed, get it integrated, get connected across all our platforms. But the team is fully engaged. We brought in some people with some payments background to help make that happen.

And one last quick one for Owen. You said, Owen, the 80 Series supply chain has largely been resolved. I know that's a nuanced way to say it, but I thought there was kind of three issues in terms of the supply; the display screen and then there were two other ones a little bit smaller. Have those all been resolved? And then you're referring to like a bigger issue around supply chain? Or – I know you can hit the numbers, it sounds like, but I'm just wondering if all three of those issues were completed. Thanks.

Right. It's a fair question. I didn't mean to nuance it that much. I think we had talked earlier about there'd still be some noise on the system in the third quarter as we settle down the supply chain issues, and in fact, there was. But we came out of the quarter with the supply chain issues addressed and the production issues on the trajectory we need for the fourth quarter. So, we feel good that the noise is now out of the system relative to the supply chain across all (28:50).

That's great. Thank you, guys.

Yes.

And our next question will come from Kartik Mehta of Northcoast Research.

Hey, good afternoon. Andre, I was hoping you might be able to look at the cost savings you talked about. As you said, there have been a number of cost savings announced, obviously, previous to you becoming CFO. And I'm wondering if you could just give a cumulative number, a comprehensive number for 2019 in terms of the cost savings you're anticipating.

Yeah. Kartik, this is Mike. Let me just start and then Andre can kind of fill in some more details. So, obviously, NCR announced in the first quarter some actions for 2018 and those announcements were kind of a piggyback on top of a prior year announcement that had recurring activities. And so, as we looked at that, we said, let's just focus going forward. So, look at our numbers as we've seen them in 2018 second quarter, third quarter, obviously, our outlook for the year, and rather trying to tick and tie back to at least two prior initiatives and announcements, let's just focus on going forward. So, the way you should like at it is there's three distinct efficiency streams going on; the Services M1 that we've announced in the past continue to execute and you can see the benefits for the M1 initiative in the Services numbers each quarter, and we're continuing to make progress, continuing to get the margin expansion. And more importantly, our customer sat numbers are continuing to improve in that area. We've got the hardware transformation, Owen spoke about that, the manufacturing shift. The work that we're doing not only in manufacturing, setting up two new plants to third parties in Mexico, but also a new distribution center up in Nashville, that work is still underway. That's been a cost drag for us in 2018. We're continuing to work through the implementation in the fourth quarter. So, there's still work to be done on that. We expect going forward in 2019 that will drive some savings on the hardware platform. So then, today, we announced $100 million-plus takeout of cost, Andre talked about it being in overhead, SG&A, discretionary spending, just to bring those areas back in line with where we think they should be. They've seemed seem to creep over the last two to three years. But take those three buckets, we're going to lay out – we'll lay out our plan for 2019, we'll give guidance. We're not going to do that until fourth quarter call end of January, early February. But we will give you where we stand on Services, we'll give you where we stand on Hardware, and what you should expect on this $100 million-plus takeout additional cost. Any other prior plan that was announced or underway, I don't try to tick and tie back to it. Just look going forward, those three cost efficiency paths.

Kartik, this is Andre too. I mentioned in my prepared remarks the first two are marginally gross margin focused. I think this third one in answer to your – response to your question, was I came in and took a close look at our operating expenses, mainly SG&A. And as you can look through the charts here in our webcast, you'll see that operating margin is deteriorating across the board. So, it's not just a gross margin issue, it's an operating margin issue as well. And I think we allowed some creep, particularly in SG&A over the last couple of years. So, this action, which is at least $100 million, is targeted at that largely, it's SG&A and OpEx, to address the fact the margin has probably fallen by about 3 points just over the last few years. So as we thought about next year and when we talk to you at year-end for our Q4 call, I think the thought process was where do we want 2019 to be from a margin perspective. Also addressing some cost headwinds that are coming at us, whether it's compensating our people appropriately, addressing the cost of a new building we have here in Atlanta, and also going into 2019 is achieving cost reduction, but also freeing up resources that we'd like to reinvest in the business and you're going to hear about a number of those next week at our Investor Day. So, I think all of those went into our thought process and also went into sizing up the magnitude of the action that we announced today.

And so, Andre, are you able to talk about maybe what percentage of that $100 million or dollar amount of that $100 million you expect to fall to the bottom line?

No, I think we'll address that in the fourth quarter. Obviously, as I said, we're going to take that, at least $100 million, so we'll be in a position to further refine that. But also when we come to you and lay out 2019, we also like to lay out for you the areas that we'd like to reinvest in the business to give you the net number that you're looking for.

And then, Mike, you talked about ATM orders improving. Maybe could you talk about the geographies where you're seeing ATM demand, and is this the result of Windows 10 or is this the result of something else?

I think our strongest has been North America, we had a great deal of success. I think, actually, Asia has been pretty strong for us, but on a much smaller number. Windows 10, I think, we've got our plan out there. We got our sales team equipped to go out and sell the upgrade. Of course, we're seeing that come in. I don't know that I'd call that out as a huge driver. I think our Series 80 is having great success. What seems to be happening is they got out in the field last year 2017. And as other bankers have seen them in the field, we've had people come in and say, wow, we saw that at another bank's site and we really like the product and they came out and made orders. So, that's continued to take off. I think we've got a little bit of help from some of our competitors in the marketplace and we've seen people come to us and have good dialogue, good discussions not only around ATM sales, but also around service and support. So, I think we feel pretty good about where we stand. Obviously, we've got work to do, the manufacturing, which we largely did in the third quarter on the Series 80 supplies, but I think we feel good about the orders and backlog.

And just one last question, Mike. The hardware business, where does it have to be in terms of a revenue standpoint or whatever other metric you'd like to use for that business to be breakeven? Because if you look this quarter, the amount you lost from an operating income just year-over-year was greater than the revenue that was deteriorated year-over-year. So, I'm just wondering, if there's a level you need to get to for that business to get to breakeven.

We talked about this last quarter that our – we said the second quarter is a little challenged getting product out the door. We knew we had some of that coming into third quarter. And we know that based on September, success of the ramp-up in the fourth quarter's happening and so fourth quarter will be a fairly large revenue number compared to the second and third quarter. We hope to approach breakeven in the fourth quarter, so we talked about that with that volume that will drive obviously allocating our fixed cost across greater number of units and get us close. Our goal clearly with the Hardware restructuring, the transformation project we're undertaking is to get us into a position where at various production levels we can operate Hardware at breakeven or better. And so, that's what we're aiming towards. I think we'll come pretty close in fourth quarter. I don't know if we'll quite get the positive side, but I think we'll get awfully close. And then going into 2019, we have to find a way that we don't lose the kind of money we lost in 2018 on the Hardware products.

Kartik, it's Andre. I said in my prepared remarks, too, that if you just – if we were just able to convert the backlog at the same rate that we did last year, and we know that exactly. Plus, some additional costs that we incurred in connection with resolving the supply chain constraints and some of the ramp-up, we would have had a breakeven hardware operation in the third quarter. So, we see a path there. We know what it takes. I think as Mike said, we're going to try to get as close to breakeven as we can in the fourth quarter. We were a little bit negative at this time last year fourth quarter. We're hoping we can get close. And then ongoing, as I said in my prepared remarks and Mike said as well, we want to try to run this at least at breakeven, if not better.

And we'll now hear from Katy Huberty of Morgan Stanley. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Guys, thank you. Good afternoon. A couple of questions for me as well. First on ATM, to hit that target for flat ATM revenue growth for the year end 2018 (38:17), it requires growth in the range of 30% in 4Q. Just want to check if that's reasonable. And then just as a follow-up to that one, the fourth quarter I believe you did (38:29) some catch-up shipments to address the backlog. So, how should we think about what the sustainable growth rate is as you get into 2019? Should we look at the 10% order growth and use that as a proxy for what next year (38:46)?

Yeah. Katy, so fourth quarter, that ramp-up, we're obviously aware that that's an accelerated level compared to the first three quarters of the year. Again, we've got the orders, we've got the backlog, and now it's execution on the plan. And we're still – we've worked through a lot of the Series 80s, we still have the plant coming up onboard in Mexico, the Jabil one, which produces ATMs for us. So, we've got work to go. Again, we feel pretty good that we can get there to that number. We think it's attainable, but not without a lot of work to get there. In terms of the ongoing level of ATM, I think we exit the year, I guess, feeling pretty good about where we stand and we'll talk more about our outlook for 2019 when we get into the next call. But there's a number of things, Win 10, we talked about. I think the competitive environment right now we would view as a tailwind. I think we feel pretty good about the product we have in the market and the success we're having with the Hardware platform. I think we feel pretty good about our software stack on the ATMs. I think we feel pretty good about our service component on ATM. So, I think we're feeling that going into next – going into 2019 and then forward that we've got a little tailwind for the foreseeable future. And we'll do some work coming out of fourth quarter and try to quantify that as we look at 2019 and share that end of January, early February. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Second question just has to do with (40:28) it's been a narrative around (40:36).

Yeah. Katy, I'm sorry, we can't hear you. I don't know if you could pick up the handset. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Sorry. Is that better?

That's better (40:44).

Yeah. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Okay. Sorry. One of the disconnects with the story has been this narrative around shifting to software and services relative to overall company margins that have come down. And obviously, you walked through a lot of the headwinds that you're addressing, certainly lots of progress with M1 in Services and the manufacturing and supply chain shifts in Hardware. So, I just – any high-level color. Again, I know you're not providing 2019 guidance, but are you confident that gross margins can begin to expand in 2019 and start to better mesh with the narrative around a shift to Software and Services, which should have higher margins?

Yeah. Katy, let me – I'm actually going to split that question into two pieces. So, the gross margin, obviously, is more than just the Software and Service side. A big piece of that's going to be the Hardware and making sure we – we incurred an awful lot of cost this year on transforming the manufacturing platform. So, that'll help. As Andre kind of went through, had we converted the backlog at traditional rate, even that number in the third quarter would've been much better. So, gross margin, overall profitability, we need to have a focus on that. And we believe that 2019 we'll get some pickup in some of the things we've done in 2018. On the shift to Software and Services, I think that's going to be incremental. It's going to be one step at a time. I think that's going to take a few more cycles and a couple quarters. The things that we're doing around reinvesting in our product, Owen talked about the ACATs, the Emerald product coming out, which is next-gen platform for retail, some of the other products we have on the retail side and in hospitality and the banking side that we're investing in. In addition to that what we're doing with our M&A strategy, where we're going out and buying products, like Zipscene, or companies that have products like Zipscene and what we did with JetPay, where that will continue to shift the mix toward software or software-driven products and also the service platform. But we're going to – that's going to be a story that's going to be incremental quarter to quarter to quarter. It's going to take us a period of time. And what we want to do is just put – make progress each quarter towards that. But I don't – the results we had in 2018 in terms of margin are disappointing across the board, not just on the software, service side, but the strategic move towards software, towards services is going to take some time, going to take some investment, take some targeted M&A like you saw us do this quarter.

And our next question will come from Dan Kurnos of Benchmark Company.

Great. Thanks. Good afternoon. Mike, maybe just on the sort of the POS landscape a little bit. With the acquisition of JetPay, certainly, you guys are not the first to bundle point-of-sale and software and we're even starting to see some of – in restaurant and a little bit to hospitality, some of the delivery or your third-party guys leading with the tablets first, which I know is not your solution, more of a square solution. But we're seeing massive consolidation in that space. And I'm just wondering sort of with JetPay, if it was more of a defensive, we need to do this to make sure that we can maintain our value in the chain or how you see sort of the landscape evolving with further consolidation? And furthermore, if you are seeing any uptick on the checkout side with the clone versus an actual POS solution?

Yeah. I mean, I'll start with your first question in terms of the strategic importance or what triggered our action. I would not characterize that as a defensive move. I can tell you when I started talking to the board and came on in late April, early May of this year, the conversations I had with our directors, conversations I had with our management team literally day one is why aren't we taking advantage of initiating payment and processing the payment through the end of the merchant. So, we literally started in May looking for how we can monetize the transactions that we start, not just with our POS, but also with some of our gateway products that we have. I do agree the market's consolidating. I think the merchant acquirers, who are not as sticky as the people that own the enterprise software with the merchants, with the retailers, with the restaurants, probably have a more defensive imperative to go out and grab what we have on the front end, because it's really hard to move the POS enterprise software systems that we have in play. It's much easier to shift the acquiring payments. So, I think we have a very good starting point. We have – still have work to do to attach the back-end payment, but that's going to be part of the strategy going forward. I think the new entrants and how they bundle, whether it's, obviously, the – in a lot of the industry, the physical brick-and-mortars are shifting and trying to participate in the digital side. The fact that you can order with your mobile, pay with your mobile. We're going to be participating in all those aspects. I don't think the numbers yet are dramatic, but that's an important initiative for us to make sure that we can take the point-of-sales transaction, take the payment there, we can take the payment on a mobile device when people order or when people pick up. So, they'll be following those trends as well. And again, we feel pretty good about where we're positioned in that whole food chain of providing services to the retailers.

Got it. And then you mentioned Zipscene in the prepared remarks, not a ton of quantitative or qualitative remarks around it. Obviously, we've heard from prior management, for I don't know how long, that data monetization remains sort of a long-tail opportunity for you guys to go after with the understanding that you have a whole bunch of hurdles with maintaining client privacy, et cetera. But can you just talk about sort of where you see that opportunity unfolding and how aggressive you expect to go after it?

Yeah. I think we feel pretty good about where we fit on that aspect. It's always (47:41) the data that we have access to, the data we can gather from our POS – point-of-sale systems, and also our restaurant systems. So, there's different aspects around privacy. So, we just need to start and we need to look at where we have opportunities to monetize the data that we have today, situation we have. So with a restaurant gathering purchase data, purchase information around their client base, being able to take that information and do analytics on it, like the Zipscene product, and then being able to (48:17) sell that back to that restaurant, where we know we've got access to the data, we've got permission to use the data, so we can create some value add. So that's what we're starting with there. We'll continue to look for areas where we can plug in, whether it's product, whether it's kind of infrastructure gathering data, and continue to monetize. Again, I'll state the same, this is not an overnight story. I know we've talked about it. We just have to make incremental steps where we can take advantage of the data, find a way to monetize it to our benefit, and this is one small step forward for us.

Got it. And last one from me, just on the M&A front. I know sort of strategic M&A continues to remain a focal point, but if you can kind of just parse out your expected uses of cash, how big – how aggressive you remain on the M&A front versus, obviously, with the shares trading where they are and understanding that you have some limitations on buyback, continuing to buy back the stock.

Yeah. I think we've been – I'll take them, just in at last the six months since I've been here that, for us to be able to shift our company and shift the mix, we've got to use some of the capital to go out and do targeted M&A and do deals like we did with JetPay and Zipscene this quarter. So our capital allocation, we'll talk about this next week at our Investor Day a little bit more. But we'll buy back enough shares to take out the dilution in the marketplace and we'll use cash flow to get a little bit of room on the balance sheet. And then we'll try to do four, five, six deals a year averaging about $100 million a transaction, a deal, and spend $400 million, $500 million on deals each fiscal year. We're very cognizant of the price points. And I think last quarter, last board meeting, a board meeting ago, we expanded our authorization. So if we need to jump in – I don't think our price has been driven down by our actions, at this stage, I think the whole market's moving a little bit. But we'll keep monitoring and I think we've got to be kind of focused for the long haul and on how we can make steps to create more value in the long run. I don't know, Andre, if you want to add to that.

Yeah. Dan, as I think about the free cash flow usage, so if you just take the midpoint of the $250 million to $300 million range that we gave you, so take $275 million, we repurchased $210 million of stock already this year, so that's even twice the amount of the dilution. So, $210 million. We announced we'll spend about $184 million on JetPay. So, that's about $119 million, $120 million use of free cash flow, so additional debt that we'll have this year. So, I think you saw in the charts we ended the third quarter about 2.8 times. We generate a lot of that cash in the fourth quarter, so probably 2.7 times at year-end. And then if you add the pension in, which is not in the 2.7 times, you're probably up to 3.5 times. So, that's about where we want to be. And I think we had – we held back on the additional share repurchase this quarter just given a number of factors; JetPay was happening, we were announcing a restructuring, we had lower earnings and, obviously, wanted to conserve cash. So again, figure end the year around 3.5 times if you adjust for pension, and then we're willing to flex up a little bit more if we found the right acquisition.

And our next question will come from Paul Coster of JPMorgan.

Yeah. Thanks for taking my questions. I got a couple. Mike, now that you've been in charge for a while, do you have some sense of what the secular outlook is for the ATM part of your business? Do you consider it, as many investors do, a sort of slow decline or do you actually believe there's a growth opportunity here across the industry?

Yeah. I think it's kind of a time horizon. So, if you look at some day – we look out into infinity, so to speak, if you look way out in the future, you can see a point where the ATMs and the use of cash is probably going to go down. I think in the foreseeable future, as we look at the next two, three years of planning, and in our intensive (52:45) planning horizon, we kind of use three to five years, we actually see some tailwinds the next two to three years. We see, obviously, the Win 10 we've talked about. We see the new product that we rolled out. We see in the marketplace just the – probably benefit of a little bit of market share pickup that we seem to be getting in 2018. So, we look at it from our perspective as at least neutral, maybe a slight benefit the next three to five years, in terms of the ATM footprint, not only the hardware, but also the software stack and the service stack. So if I look out 10 years, 15 years, clearly, our strategy is to continue to invest, continue to grow other parts of our business, the software and service component, higher recurring revenue streams, look at the margin on that side. But we don't think ATMs are going to hurt us over the next three to five years.

Got it. Okay. And then Mike, investors are very intrigued by you and Frank coming to this company with your fin-tech background and see you as potentially good proxies to going out and making acquisitions in the software service space. However, your multiple versus that of most software companies makes it very difficult for you to make acquisitions at a reasonable price for you. Is your hypothesis, though, that in this kind of micro-cap private space, there's a lot of opportunities that are not going to be too expensive for NCR?

The price point that you pay in kind of the market, we go through cycles. We're clearly in a high cycle of what's out in the marketplace, the kind of businesses we like to buy. And we've kind of done this before. We used to be part of a bank holding company, we were a cash buyer. We had to generate cash return and give it back to the bank. We had to be very focused on what we acquired. So, there will be deals that take place in this marketplace today in 2018 and 2019 that we simply can't compete, we can't write a check. That being said, we don't need to buy customers and EBITDA streams in the marketplace. We need to buy products. We have a unbelievably strong distribution channel. We have an unbelievably strong customer base. So to the extent that we can go out, get products that we can distribute through our sales channel, to the extent that we can get products that we can cross-sell and upsell to our customers, we think we can create that mix and shift to software, to services. There's no question we have to be diligent. There's no question that we're going to be buying at – we're a cash buyer, we have limited room in the balance sheet. But we still think we can do deals like we did this quarter going forward.

Got it. Thank you.

And we'll take the next question from Matt Summerville with D. A. Davidson. Matt J. Summerville - D. A. Davidson & Co.: Thanks. Couple of questions. First, can you provide a little incremental color on the retail, hospitality, and sort of include self-checkout in there. Those sides of the businesses and the degradation you're seeing in the top line, how much of that is; one, comparisons; two, NCR self-inflicted, we'll call it, execution versus what's actually happening in the market? If you can dissect that, that would be helpful.

Yeah. It is probably a little bit all of the above. We obviously have a little bit of self-inflicting we talked about in the past, kind of mentioned some product cycles. We talked about the ACATs going all the way back to, we put those in place early second quarter. And those were areas like SCO, there's OPTIC device which is a convenience gas station; Emerald, which is focused on retailers. We didn't get the products to the market fast enough. That clearly hurt us in 2018. Those products are up in pilot. We're having success getting referenceable clients. So, we'll get those out to our salespeople here in the fourth quarter, start building some momentum into next year. So, that clearly hurt us. I think the market – I think we still feel pretty good about where we are positioned in the market hospitality with the restaurant and Aloha product, with the market share, we think it's a great opportunity to cross-sell, upsell into that base. Add and extend products around the core that we have, which is really the enterprise software that they run a restaurant with, and then clearly connect payments with JetPay, process a payment. The retail space, the SCO 6 challenge was a big piece of that. Getting the Emerald, which is the cloud-based retail product, out there and starting to build some momentum, which we would hope to see starting in 2019 will be a part of that. But we've got some work on our side. I think the market opportunity we still feel pretty good about heading into 2019. Matt J. Summerville - D. A. Davidson & Co.: And then can you comment also – just a question on the cloud portion of the business. I don't have the numbers in front of me, but what I recollect off the top of my head, the amount of net ACV you had in Q3 was, I believe, the lowest number that NCR has reported in quite some time. Could you talk about what you're seeing with Digital Insight? What's going on there from a market point standpoint and then maybe comment more broadly on the Silver side of the business as well as maybe a little more on hospitality?

Well, yes, on cloud, it's really those three pieces. It's Silver, it a wrap of products around Aloha. So, Aloha gets installed on the hospitality side in the restaurants and then there's a series of product that wrap that are cloud-based that can be part of a cloud. And then, obviously, Digital Insight. I think every year you go into the cycle, you're going to have some puts and takes, particularly on the banking side, where banks – there's still a fair amount of consolidation taking place in the banks where we lose customers. So, we've always got to be bringing more clients on board. And we've got a little better than we did in second and, obviously, third quarter to sign new accounts. But it really is across all three of those business lines. And we brought in some new leadership on the Digital Insight side. We brought in an experienced veteran in the industry for mobile and Internet banking. And we're building up a team there to focus on that. And I think we'll see some success. We're putting some focus on hospitality, put a new leader to run hospitality this quarter as well. So, we've rebuilt the teams. We talked last quarter about realigning around business units so we have a business unit focus. We have somebody who takes ownership for going out and driving top-line growth, for driving the investment, and for driving – adding new customers. So, not where we wanted to be third quarter. We've got a great deal of focus on that, heading into fourth quarter, heading into 2019.

And our next question will come from Rob Wildhack of Autonomous Research.

Hey, guys. Just want to start with the unattached license line flip to 15% growth this quarter. What were the drivers of that? And then what do you think is the kind of sustainable growth profile here going forward?

Yes.

Yeah. So, you always got to be a little careful. Unattached license are – we go out and sell a product and book a big license fee, and so sometimes goes up and down based on the timing. So, I don't – I won't get overly excited about the growth in any particular quarter, because it might just be what happened last year in going over. We had great product growth in the banking side, past quarter, we've got an accounting (1:01:03) product that does well. But we report those numbers. I don't think – again, our management focus is just consistency and selling long-term contracts and value. So, that's more of a up and down. And when they go down, our answer is going to be the same, quite frankly.

Yeah. This is Andre. We sold some bundles with increased third-party content. So, that's got a higher cost to us and the lower overall margin, but then again, that drove revenue higher in the quarter.

Okay. And then the cash flow guidance is down this year, I understand that. With all the longer-term strategy shifts, restructuring programs, et cetera, I mean is there any change in your view to the long-term cash generation profile of the business?

No. I mean, the conversion rate that we'd expect to see going forward are still going to be in that 80%, 90% that we've seen historically. I think we're doing a pretty good job at generating cash actually last couple of years. This year, we clearly got hit by just the shift. We've got elevated inventory levels on raw materials and finished goods that are going to hit us in fourth quarter, which is why we brought that down. We're going to have some cash spend related to some of the cost efficiency actions we're taking in the fourth quarter. But I think long term, you should look at it and say, to the extent that we're generating earning, that should convert to cash flow.

And that does conclude the question-and-answer session. At this time, I'll turn the conference back over to Mr. Mike Hayford for any additional or closing remarks.

Let me just start by thanking everyone for joining us today on our third quarter earnings call. To close, I want to make a couple of points. First, we've made some great progress addressing our execution challenges and positioning NCR to return to growth. However, we do recognize there is more work to be done. Second, the acquisitions of JetPay and Zipscene are exciting opportunities for NCR. They are indicative of our targeted M&A strategy to acquire solutions that we can leverage with our existing product portfolio, our existing sales distribution and drive software and services revenue. And lastly, I feel confident that we will be getting back on track and positioned for growth heading into 2019. Again, I want to thank you for your time today. I, along with the rest of the NCR team, look forward to providing you with some more detail and updates on our strategy, our operations, and our progress during our Investor Day next Wednesday on November 7.

And that does conclude today's teleconference. Thank you all for your participation. You may now disconnect.