Good day, and welcome to the NCR Corporation Fourth Quarter Fiscal Year 2018 Earnings Conference. 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 fourth quarter and full year earnings call. Joining me on the call today are Mike Hayford, President and CEO; Owen Sullivan, COO; and Andre Fernandez, CFO. Before we get started, let me remind you that our presentation and discussions 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, the press release dated February 7, 2019, 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 for joining us today for our fourth quarter and full year 2018 earnings call. I will begin with some of my views on the business before turning it over to Andre, who will review our fourth quarter and full year 2018 financial performance, as well as discuss our outlook for 2019. Then Owen, Andre and I will take your questions. I’ll begin on Slide 3 with my thoughts and not just the fourth quarter, but also the last nine months I’ve spent as CEO and where NCR is as we enter 2019. The fourth quarter was in line with our expectations while the full year was within the guidance range we provided on our second quarter earnings call. The results demonstrate the progress we are making, improving our execution and stabilizing our business. As I have stated in the past, our primary goal in 2018 was to take care of our customers, to improve execution around our new product introductions and begin to build a stronger and more efficient NCR. The fourth quarter included some highlights that show the success we’re having executing our strategy and laying the groundwork for improved performance in the years ahead. First, our services business continues to generate improved margins via the ongoing implementation of our transformation initiatives; second, we grew our recurring revenue in the quarter and for the full year; and third, our manufacturing network restructuring resulted in a significant ramp up of hardware production and lower costs than in the third quarter. As we previously discussed in the second and third quarters, we experienced challenges with our hardware delivery, including supply chain issues with the rollout of our 80 Series ATMs, production manufacturing ramp up at our outsource partners and difficulty scaling our new distribution center. As…

Thanks Mike. Moving to Slide 7 and an overview of our fourth quarter financial performance. Consolidated revenue was $1.8 billion, up 1% as reported and up 3% constant currency. Revenue was driven by growth in our Services and Hardware businesses. Our non-GAAP gross margin rate decreased 180 basis points as reported and 200 basis points constant currency. Margins contracted in our Software and Hardware segments, which was partially offset by ongoing margin growth in Services as our process improvement initiatives continue to take hold. Non-GAAP EPS was $0.84 and in line with our expectations. Free cash flow was $317 million in the quarter, which was impacted by lower earnings year-over-year and higher inventory associated with increased hardware production as well as the cash impact of our restructuring in Q4. I’ll speak more about our restructuring activity shortly. Slide 8 shows our financial highlights for the full year. Revenue was down 2% on both an as-reported and constant currency basis. The revenue decline was driven by lower hardware sales, which was partially offset by higher services revenue. We continue to make progress expanding our recurring revenues would increase 3% in 2018 and comprised 46% of total revenue. For the full year, our non-GAAP gross margin rate decreased 140 basis points constant currency, driven by higher costs and our Software and Hardware segments. Non-GAAP diluted EPS was $2.62 for full year 2018, which was within our guidance range. Free cash flow for the year was $223 million below recent guidance and which was negatively impacted by higher working capital, driven by a higher hardware backlog at year-end and as a result, seasonally higher production expected in the first quarter of 2019. Moving on now to each of our segments. Slide 9 shows our Software segment results. Software revenue was essentially flat year-over-year,…

Thanks, Andre. In closing, we spent the better part of 2018 getting back to basics. We refocused on our customers, organized our company around profit centers, delivered critical products to the marketplace and strengthened our management team. We enter 2019 with improving execution and expect to market return to growth. We remain steadfast in our strategy to shift our revenue mix towards more recurring Software and Services and are increasing our investments in our six strategic growth platforms as we look to accelerate our transformation. We have made tremendous progress over the last nine months, and I’m proud of the entire NCR team and their commitment to our customers and the energy and excitement they have shown in support of reshaping the future of NCR. While there is much work left to be done, I believe we are on the right path to reinvigorating our business and elevating the competitive differentiation we offer customers around the world. Thank you for your time. And now Andre, Owen and I will take your questions.

Thank you. [Operator Instructions] We’ll take our first question from Dan Perlin with RBC Capital Markets. Please go ahead.

Thanks, guys. Good evening, and thanks for all the incremental detail. I had just a couple of quick questions. First was around the ATM growth in the quarter. It was very nice to see a rebound of 26%. You did say it came in a little bit short of expectations. And I’m just wondering what drove that delta for you guys? I know that you had been running at the supply level. I thought that would kind of get you to flat, so just wondering if there were some call-outs there first.

Yes, Dan, thanks. To say it’s the low expectations, I think I’d say it this way. We had a set of goal to get back to year-over-year even on our revenue of ATMs. And as we shared in second, third quarter, we actually had pretty good orders, yes, we were a little bit constrained by our ability to manufacture, which picked up in the third quarter and continued through the fourth. So I think what we’d say is we had enough orders and backlog to get to a year-over-year flat number. And the teams worked really, really hard to get the backs out the door, get them shifted and then solved. But we were a little bit short. And the constraint there was really manufacturing side as opposed to orders or backlog.

Okay. So a little more timing into the expectation would be the incremental falls into the first half of the year – first quarter of the year. The second thing is on the pivot away from M&A to internal investments. And so I’m wondering, was it something that as you were going through the strategic planning process that you realized now was the time to act to invest in these internal investments, in particular around software? Or was it a function of just M&A opportunities that were just beyond your balance sheet at the end of the day?

Well, I think I’d say, first, what you described, we laid out our six kind of strategic platforms in November. And what those are, those are areas that we feel strong that we’ve got assets that we can leverage to take America and win. And so we laid out the six areas. As we put our plan together for investment, we’ve got some internal build-out that we need to do. And we talked about Aloha and bringing that to cloud. We talked about the Emerald product, which we’ve got up and running that a couple of sites already end of this year that we’re going to put some more money in, which gets into a cloud-based retail product. We talked about Silver. We talked about what we’re doing in the petroleum area with our optic product; and then what we’re doing with Digital Insight, what we’re doing with authentic on the bank side. So we look at a series of products. We looked at the current pace and plan that we have been executing for the last couple of years and said we have a chance to accelerate that and spend a little bit more money in 2019 and get to market faster. So we made the decision to do that. I don’t think I’d look at it and say we could not find enough M&A opportunity. I think we still see M&A and kind of at the level that we had indicated in November at Investor Day where we’re going to be buying a little earlier stage. We’re going to buy product. We’re going to buy distribution. We’re going to buy some market share and get some leverage out of areas, particularly in our global services and professional services area. So I think we still see the opportunity, but clearly, as you referenced, there’s some larger ones that we will not participate in. But as we looked at 2019, we said let’s spend shift a little bit more into internal CapEx and then spend a little less on M&A just based on the opportunity to build out our internal products.

Dan, it’s Andre just adding. I think when you look at the performance of our Software business, in particular, you see it’s not exactly where we want it. And so the margins, I think in my prepared remarks, the margins came down in part because we were incorporating a lot of third-party products. And I think as Mike said, we need a broader software portfolio to rely less on third-party. So I think we think of M&A with that in mind. Also, too, you look on something like software maintenance. As we’ve had, although they’re getting better, some product quality issues. So part of our CapEx is also investing to fulfill – to meet a technical bet in software that we think will then improve our software maintenance revenues and margin over time.

Great. I just want to sneak one more in, if I could to Andre. So the 1% to 2% guidance, two things. One, what’s the FX assumptions embedded in that? And then two, I wasn’t clear if you were suggesting that the shift towards subscription revenues was not already contemplated in that. You made it sound like that might be up for review to the extent that we’re going to accelerate. Thank you.

Yes. I don’t think we disclose. We anticipated some FX headwind in there. The FX overall was neutral for us for this year, but there is some implied in there. I think it’s around 1% or so. And then we also have our acquisition in there, and that’s also 1%. So again, there’s – when you that JetPay, the amount of organic revenue growth is somewhat limited. I think when I hinted at the shift, that really wasn’t an impact so much in 2018. But as we develop the new products and actually, we’re starting to see on the margin now that we’re forced to decide whether we take something as a term license or we take it as a subscription. And so as we start to consciously do that and to the extent that it impacts our revenue, we just at lessen we want to, we’ll keep you updated to the extent that it does and update you along the way. So there is some of that happening, which is contemplated in the 1% to 2%. To the extent that it increases, we’ll keep you posted.

Yes. Let me just add some color. So we talked about strategically the mix shift to recurring, and we set some goals to move from the mid-40s, which is where we ended up the year in 2018, up north of 60% over a five-year period. We also talked about shifting the mix away from Hardware to Software and Services-led offerings. So as Andre and Owen and the team built the budget, we looked at a specific product that we have ready to go to market and sell the subscription so we get a recurring revenue. And those are contemplated in the plan. I think the other point, if we could accelerate and move faster to subscription, we would. So right now, we have baked in the plan a level of migration to subscription that we believe is going to happen. If we see an opportunity to accelerate, we will take advantage of that, and then we will share with you what happens during the year.

Great, thank you.

And we’ll take our next question from Katy Huberty with Morgan Stanley. Please go ahead.

Yes, thank you. Good afternoon. First question, how are you thinking about first half versus second half revenue and earnings seasonality? Obviously, the company has had some back-end-loaded years or expected some back-end-loaded years coming into both 2017 and 2018. How are you thinking about seasonality in 2019?

Thanks, Katy. It’s Andre. So in my prepared remarks, I think I mentioned the cash flows. I think we’ll be very consistent with what’s been four, five-year average. And likewise, our EPS at plan is also consistent with the four to five-year average. So I think that’s very much in line. When you look at then what’s happening over the course of the year, remember, you’re starting the year with a very strong Hardware backlog, and that’s going to be offset by – remember now we’ve got an acquisition of JetPay, which is initially dilutive and then improves over the course of the year. You’ve got interest, which is higher. Interest have been increasing over the course of 2018 and now is higher throughout 2019. Also, our – as you saw our tax rate, which was 19% in 2018 is higher in Q4 of 2018, and then we’ve given you 23% to 24% guidance for next year. Also, remember now some of our investments are around things like Silver, which Mike talked about in his prepared remarks, and also anticipated software margin improvement that we think we’re going to get over the course of the year as we resolve product quality issues and as we spend additional CapEx in software. So again, overall, I think, again, sequentially in line with the last four or five years. By the way, that – as a data point, I think first quarter was about 16%, 16.5% of total year EPS. That’s our four to five-year average. And then when you just look at the comp of 2019 versus 2018, you’ll see a better earnings comp just year-over-year not versus the four, five-year average in the second half of the year. Because recall, the second half of 2018, particularly the third quarter, was difficult for us with the manufacturing issues we had.

Okay, that’s helpful color. On gross margins, they were down 200 basis points in the fourth quarter. Obviously, tied to the work that you’re doing in Hardware, which is still in process. But with this strategy, this shift towards Software and Services, clearly, the gross margins need to start moving in the right direction to match that strategy. When do you think you’ll be through the work in Hardware so that, that’s not holding you back from showing the right margin trajectory?

Yes. This is Owen, Katy. I think, from our perspective, we came through or entered the fourth quarter with still some noise in the system, if you will. Our confidence level leaving the fourth quarter is significantly higher. We believe that from the supply chain perspective, we have qualified the suppliers that we needed to introduce into the supply chain. We have rationalized the supply chain and stood them up around the local markets in Mexico and Budapest and Chennai. And we think we’ve got the production levels of performance where we need them. So we come into 2019 feeling good about both the production and eliminating the headwinds on expedites and extraordinary costs for meeting the manufacturing needs in the fourth quarter. And now we need to turn our attention to really leveraging what we’ve got in place from a cost efficiency, cost performance standpoint. So we do believe we’re back on track. We – I want to see us perform at the production levels and at the efficiency levels as we go through the first quarter into the second quarter, but we’re feeling like we’re on the proper trajectory to start moving the Hardware margins much closer to the breakeven that we’re all looking for.

That’s great. Thank you.

And Katy, the bridge that Andre provided on the EBITDA lock, I think, speaks to what’s going to happen in Hardware that, in addition to some of the supply management that we do on an annual basis. We have costs that we incurred in 2018 over the transformation such as expediting and moving materials around and expediting and moving finished goods around that we will not incur. And we also had costs related to transitioning from a couple plants that we owned to an outsourced provider. And we had some overlaps. So those costs go away in 2019. And so to Owen’s point, we’ll make a nice headway into improving profitability. We don’t believe we’ll get it to profitable in 2019, but we’ll make a pretty good movement and make it much more towards breakeven.

Good to hear. Thank you.

Okay.

We’ll take our next question from Dan Kurnos with the Benchmark Company. Please go ahead.

Great, thanks. Good afternoon. Maybe if you guys – I know you touched a little bit on this in the script and in the slides. But just you mentioned Service wallet share. Obviously, that was kind of a big highlight to the upside, in our view, in the quarter. Customer satisfaction, you called out, but any other incremental color you could provide there. And then just on JetPay, I know that you guys talked about some immediate customer uptake once you guys had it on the platform. You’ve given us some parameters around expectations for the year, but if you could help us think how much of that is sort of organic JetPay growth versus how much of that is assumed customer wins and where there might be some delta there would be helpful. Thanks.

Yes. I’ll start with the Services. So again, I think we were pleased year-over-year Services, our margin increased by 110 points or 140 on a constant currency perspective. So we’re continuing to see we’ve made investments now 2017 and 2018 specific actions that we’ve taken to improve the technology that we leverage, to improve the model that we used in terms of kind of the hub-and-spoke that we’re using for Services. And then as you referenced, we’re very focused on service. We did a number of things. So in addition to improving the margin, we did a number of things on the service platform to improve our leverage to our customers and to focus not just on meeting our contract commitments, but focus on winning against our competitors. So specifically, ATM market, our goal is to be the best provider in the marketplace not just meet our obligation. So Services, we feel very good about heading into 2019, and the plan for 2019 is to continue to improve service quality and get some margin expansion. On JetPay, obviously, we’ve picked up a book of business. And the plan is really to go into our businesses where we already have a relationship. We have a relationship on the point-of-sale with Hardware and with Software in both Hospitality business and also the Retail business. So existing customers who are using, in some cases, our Hardware, our point-of-sale system that drives their enterprise as well as a payment gateway like connected payments. And then we would attach the merchant acquiring services that we picked up with the JetPay acquisition and complete the transaction and take a fee for that. So the team right now, you may have seen with the press release clearly the day after we closed, we have an Aloha client up and using JetPay from merchant acquiring. We’ve continued to focus on adding more clients. We’ll do that throughout the year. We’ll add scale and capacity to JetPay, and our goal there is to cross-sell. So we have a chunk of the growth related to JetPay in 2019 is not just year-over-year acquired revenue, but also growth in that business.

Great. And if I could just sneak one more in just to ask the M&A question a little bit differently. How much do you think – if you’re looking at kind of the three to five-year plan, Mike, that you’ve outlined here, how much of the decision is – you’re looking at the, as you put it, internal maybe deficiencies or whatever it is on the tax staggering maybe Andre brought that up. How much of that is holding back growth versus going out there and buying kind of what you need to tuck in to have this thing with the right mix and the right growth trajectory on kind of a three to five-year time horizon?

Yes. I think, again, we looked at some of the assets that we have today. Example would be in hospitality, the Aloha product, which has a very, very strong market share. And we said we’re much better of investing in Aloha, continuing to add the function, taking Aloha to the cloud and then continuing to pick up market share than trying to go out and tackle on another product. So same in retail with the Emerald product and the investments we’re going to make in Emerald. I would say the same in Digital Insight what we’re – where we have hosted offering focused on the U.S. We believe we have a very strong product, and we felt better about investing in our own product. And those three examples, so we didn’t go out and acquiring. But I don’t want to – so we still think there’s opportunities to do M&A. We’re going to continue to pick up products. And again, to put into perspective, we think our brand and our distribution reach and our ability to install and implement with our Services platform is stronger and larger than the product mix that we have. So we look at it as an opportunity to pick up more products like we did with StopLift, like we did with Zipscene, where those are going to be cross-sell products. We picked up a HR and payroll system with the JetPay acquisition that we’re going to cross-sell in the SMB market. So we’ll continue to look opportunistically at areas that we can expand just based on – we think we have some leverage room with our footprint.

Great. Thanks for the color.

Moving next, we’ll go to Matt Summerville with D.A. Davidson. Please go ahead.

Thanks. Two questions. First, can you just comment specifically on the ATM business, maybe talk about the underlying tempo you’re seeing in terms of incoming order rates across the three major regions, kind of frame up the market, if you will, and kind of removed from that the noise around the delivery challenges, et cetera, that you would have over the course of year. Again, trying to get a real feel for the underlying tempo in that business specifically.

Yes, this is Mike. Let me just start with as a macro level and then I’ll have Owen and Andre kind of cover the regions. So again, 2018, I don’t think I said it was a pretty good ATM year for us that we start to ramp up in the third quarter than we were hitting stride in the fourth quarter manufacturing. But again, we had strong enough orders that we feel exited the year with the backlog. And so we feel good about running into 2019 that we’ve got our plans able to address the backlog and convert that into revenue. So year-over-year, we look at ATMs. Last year, we were struggling to get to breakeven. We think we’ll get a little growth out of the ATM business this year into 2019. And we – a little bit of that conviction is just the backlog is strong. And then we – everything we’re seeing is that the market is still holding up for ATMs. Predominantly as – it’s literally as they replace branch functions, less of the cash dispenser and more as a substitute for automating what takes place in a branch for both personal lines and small base lines. Owen, do you want to speak to kind of the…

Yes, I would agree with all of that. If we look at 2018, had our manufacturing and government help based to 2017, meaning if we had maintained the same conversion rate, we would have been flat, probably up 1 point on ATM. So the momentum was there. What was seen in terms of backlog right now, our order rate is around – just about 9% growth year-over-year. And our backlog coming into the first quarter is up 22%. So we think we’re feeling the momentum that the market is – we still think exists in the marketplace. Demand for the 80 Series is very strong. We’re getting good tailwinds from both Win 10 and from – some of the competitive activity out there. Across the regions, I would say the U.S. market continues to be very strong. Europe is flat to slightly up. We’re seeing less – and probably down in the Asia Pacific market. But generally, we see that momentum coming out of the year into certainly 2019 with a pretty strong outlook that if we keep executing out in the fields and keep producing at the level we are, we should have a good ATM performance in 2019.

And then just as a follow-up question. Would you guys be willing to parse out the magnitude of onetime, I’ll just call them hits, you took in the Hardware business due to some of the self-inflicted stuff that you’ve talked qualitatively about today.

Yes. We – again, we had a couple of different areas that hit us with all the transportation and the movement, we had all the plans. I don’t know, Andre, if there’s a rough kind of range that they hit us with.

Well, I think what you saw in our charts was on an operating basis, we lost, I think it’s in the supplementals, $125 million this year. But sequentially, that is improving. And I think we’re saying, listen, we’re not going to break even next year, but we’re going to dramatically reduce that loss. And I think we’re going to try to cut that by more than half. So that’s $50 million to $60 million that we’re going to pick up through a combination of one-timers in 2018 that won’t repeat, better pricing environment, some savings that also that we’re getting from our manufacturing transformation initiatives as well. So year-over-year, again, we’re going to shrink that deficit by probably at least $60 million, $70 million.

Thank you very much, guys.

Moving next, we’ll take a question from Ian Zaffino with OppenheimerFunds. Please go ahead.

Hi, thank you very much. The question would be on the Services side. We’ve seen some nice margin expansion there. How much more do you think there is? Or do you have a target out there that’s internally that you’re targeting? Thanks.

Yes. We’re pretty pleased with the improvement last year, 110 basis points or 140 on a constant currency basis. Our goal has been each quarter to pick up some improvements. We’ve got from planned to 2019 to continue to pick up incremental over the course of 2019. I do think we expect it to slow down. I think the improvements we’ve seen the last couple of years with the very focused effort and the efforts been focused around not just cost take-up, but changing the model, also driving revenue and driving efficiency with sale. So I think you’re going to see that slow down a little bit in 2019, so we will not get that quite see margin expansion. And then what I would say is going forward, I think we feel good about the model, and we need to add some scale to it, meaning add some more customers in a market to continue to get basis point improvements. So I’ll leave it at that and if you will get a little bit an increase, and then we’ll have to look heading into 2020, whether we can pick up some more expansion.

Okay. And then just a follow-up on the revenue guidance. It seems like so-so. I think you said organic revenues will be roughly flat to maybe up 1%. Is that what you said? And then, I guess, the follow-up is really what I’m getting to is. How do you see it breaking out between the different businesses and the different divisions as far as everything can be a rough grower or rough flat you expecting to declines, et cetera. Thanks.

Yes. I’ll start with kind of revenue. So we said 1% to 2% revenue growth. And again, if you look at JetPay, that’s almost a point. So organically, you could look at that and say it’s 0% to 1%. I think what we shared at Investor Day is we were going to get back to growth in 2019. And based on 2018, it was off a couple of points. And so we do plan to get growth in 2019. We built a plan that we feel good about. But again, we’re looking at not only getting back to growth and driving some incremental improvement in our profitability. We’re trying to change the business. And I think we shared at Investor Day that this is a three to five-year journey that we’ll continue to get some growth. But including in that growth is changing the mix and moving into recurring. So we’re going to have a little bit dampened revenue growth, because we are going to be shifting our – some of our businesses to a subscription-based. You’re going to see us move from Hardware to Software and Services. We have a lot of investment going on Software and Services in 2019. So we can continue that move. But again, it’s not going to be a one-year shift. It’s going to take a couple of years to get there. So I’ll let Andre give a little color into where we see the growth.

Yes. I think you hit it. That’s – we expect JetPay, so payments not only the core business, as Mike said, but also attaching payments onto things like Silver, which is one of the key areas that we’re investing in. So as we spend CapEx on Silver and ramp-up Silver, every Silver box that goes out, it’s going to have a payment solution connected to it as well. So you got payments, Silver and the payments related to Silver, the ATMs we talked about and then a shift in licenses, as we said, I think on the margin, we’re looking at potentially lesser term licenses in some areas and then more toward recurring, which could have a dampening effect. I think where the margin growth and is going to come from is just more productivity, both in, as I said, as we spend more and getting margin improvement on the Software, as well as the Hardware that we talked about.

Okay, great. Thank you very much.

We’ll move next to Rob Wildhack of Autonomous Research. Please go ahead.

Hey, guys. I wanted to ask a little more about the shift from license to subscription. Can you talk about any feedback you’ve received from customers so far and if there’s been any diversions in those responses across the different verticals?

Yes. Let me – so again, we’re at the beginning of that journey, and we did very little in 2018. You could just assume none. I mean, we put plans in place. We had some products. We don’t have all of our products ready to make the shift to subscription or cloud. So we didn’t have much in 2018, by the way, of going out and sampling the market. Owen and his team have done a lot of work looking at how do we bundle, how do we package that and go to the market in that fashion. We’ve started to do calls in this fashion, and we started have some very some good success around feedback. But we’re early stage. Hopefully, at the end of this quarter we do our call, we can talk about some of the successes going forward. We’ve planned, again, incrementally that we’ll have some success in 2019, which is why our – we have a level that we’ve indicated in terms of guidance. If we have better success than we think, again, we’ll come back and give you an update. So think of it as early stage, and we’ll report every quarter at how well that transitions going.

All right, makes sense. And last quarter, you called out the competitive environment is being a tailwind. Owen, you touched on it a little bit, but can you give us some more detail as to what you’re seeing now and kind of what you’re expecting for 2019?

I’m not sure we have quantified exactly what the competitive element of market activity looks like. I mean, in general, we’re feeling like that there is still an awful lot of opportunity out there. Our folks are being as aggressive in terms of our marketing plans and our coverage plan as we have challenged them to be. And I think what we’re seeing is a collective of results [indiscernible] all the different reasons. But I haven’t quantified how much of it’s from [indiscernible] or from competition. Our sense is that there’s clearly some tailwinds there, but we haven’t really quantified.

I mean, we feel pretty good about our Series 80, which we rolled out last year. And again, we had some challenges getting out the door because the demand was a little stronger than we anticipated. We feel good about that compared to the competition. I think we feel good about where we sit vis-à-vis some of our competitors and the feedback from marketplace in terms of where we’re positioned with our capabilities around servicing ATMs and again, our machine itself. So I think we said we’re going to get some growth back in ATMs. I think we feel that we’ll win our share or maybe a little more than our share in the marketplace. We have couple of strong competitors there, but we feel good. Self-checkout, we have a big initiative last year to get a self-checkout device out the door, kind of a little bit late, but we started to get some sales in the last half of the year. Year-over-year self-checkout was not strong in 2018, but we expect that to come back a little bit. Competitively, we think self-checkout will be good. I’d say the retail side, we’re looking at that. We feel pretty good. With some of the Hardware issues, we got Hardware issues on the retail point of sale systems going out the door. My only concern there is that we have customers who typically relied on us. And we have to watch to make sure they come back now that we have the capacity to deliver. So we’ll watch that. But again, on ATMs and self-checkout, we feel pretty good about our competitive position.

And we’ll move next to Paul Coster with JP Morgan. Please go ahead.

Hi, thanks. This is [indiscernible] on for Coster. Thanks for taking my question. So just a follow-up that much easier comps in self-checkout and point-of-sale. So just wanted – I want to hear about some of the deals that you have in the pipeline that give you some confidence for some growth there.

Well, without, I mean, mentioning specific deals, again, on self-checkout, we talked about last year about getting our code as execute enough the door, particularly for the European market. And it took us a little bit longer than we anticipated. So we have that now, and we do have a little bit easier comps. So we feel pretty good about this goal again. Point of sale, the biggest impact in 2018 was our optic device, which was a petroleum gas top head of a pump device that we had pretty good sales in 2017 and in 2018. Did not materialize sales based on our ability to get the product up and running for additional customers. So we have a little bit more confidence in that coming back in 2019. I’d say, as you look at the growth year-over-year, again, we’ve got 1% to 2%, particularly JetPay. And it’s going to be a pretty good balance. We expect some of the products that we focused on in 2018 to be in the market for 2019 and to be driving some sales. I don’t know that I’d call out any particular deal or customer that’s going to – that we’d say is going to make a difference per se other than all of them are going to help fill in our book for 2019.

Okay, thanks. And then the follow-up is on the ATM space. So the consolidation happening possibly in the regional banking space, how does that kind of impact future ATM software demands margin, et cetera. Thanks.

Yes. A little bit, we have to look at it and say the number of ATMs is begin drives our business. And so we believe the number of ATMs, at least on got announced today is going to continue to be out there. In some cases, you worry a little bit on each side. I think in this situation, we have very good relationships on both entities that are combining. We look at it, like you said, the Hardware, we look at the Service and top of the Hardware, we look at the Software stack on top of the Hardware. And our goal is to be a winner in the Service stack, to be a winner in the Software stack and be a winner in the Hardware stack. So in this situation, I don’t think we see anything at risk for us in that combination, but we’ll have to see how that plays out the next couple of weeks.

And at this time, I’d like to turn the conference back over to Mike Hayford for any additional or closing remarks.

I just want to thank everyone for joining us today. To close, in 2018, we made significant progress in improving our execution and positioning NCR to return to growth. I’m confident that our strategy we shared at our Investor Day will create long-term shareholder value. The plan that we just laid out for 2019 puts us on the path to achieve our goal, and our entire team is committed to achieving our goals for the year. Again, I want to thank you for your time and look forward to speaking with you again on our Q1 earnings call and providing an update on our business progress.

And ladies and gentlemen, this does conclude today’s conference. Thank you for your participation. You may now disconnect.