NCR Voyix Corporation (VYX) Q2 2025 Earnings Report, Transcript and Summary

Greetings, and welcome to the NCR Voyix Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the call over to your host, Sarah Jane Schneider, Vice President of Investor Relations. Thank you. You may begin.

Good morning, and thank you for joining our second quarter 2025 earnings conference call. This morning, we issued our earnings release reporting financials for the quarter ended June 30, 2025. A copy of the earnings release and the presentation that we will reference during this call are available on the Investor Relations section of our website, which can be found at www.ncrvoyix.com and have been filed with the SEC. With me on the call today are Jim Kelly, our Chief Executive Officer; Brian Webb-Walsh, our Chief Financial Officer; Benny Tadele, President of Restaurants; Darren Wilson, President Retail; and Nick East, our Chief Product Officer. This call is being recorded, and the webcast is available on the Investor Relations section of our website. Before we begin, please be advised that remarks today will contain forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our earnings release and our other reports filed with the SEC. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. In addition, we will be discussing or providing certain non-GAAP financial measures today, which we believe will provide additional clarity regarding our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this morning and our supplemental materials available on the Investor Relations section of our website. With that, I would now like to turn the call over to Jim. Jim?

Thanks, Sarah Jane, and good morning, everyone. I would like to welcome you all to our second quarter earnings call. I will begin with a summary of our recent performance. This quarter, we continued to execute on our key initiatives, winning new customers in both our restaurant and retail segments, signing existing customers to the Voyix Commerce platform and gaining additional interest in our latest cloud products and payment capabilities. I remain encouraged by the progress we are making and our ability to improve future performance. We will be launching additional VCP capabilities beginning in the fourth quarter and continuing into next year. In retail, we will be launching our enterprise grocery and convenience point-of-sale, self-checkout and fuel at the NRF show in January. In restaurants, we'll be launching a new all-in-one application for labor, inventory, reporting and scheduling in the fourth quarter and our new centralized menu management solution in early 2026. For payments, we completed our pilot for Voyix Pay in the U.S. in July and are on track to complete the migration of our existing SME portfolio and sign new customers directly to the processing platform by mid-September. We are already in active discussions with our existing mid-market enterprise customers to offer acquiring solutions not available on our legacy JetPay platform. We're also enabling acquiring in the U.K., Canada and Latin America as Global Payments acquisition of Worldpay provides us an even broader array of in-market capabilities. Based on contract renewal dates, we have initiated conversations with about 10% of customers thus far regarding our expanded services offering, including payments. Going forward, all new software contracts will be presented with our payment capabilities as the 2 industries have become increasingly intertwined. This will reduce vendor management complexity and potential store downtime while enhancing revenue opportunities for the company. Turning to hardware. We continue to progress on the implementation of our ODM agreement, which will commence by year-end. Our pilot for our European markets is already underway and has met expectations thus far. At our Nashville facility, we are in the testing phase and expect the pilot for the Americas and Asia Pacific to begin next month. Since our call in May, there have been no material changes to the tariff-related cost to our business, which we continue to estimate to be between $8 million and $12 million for the year. Given the ever-evolving tariff situation, we are monitoring the potential impact to our business and we will reassess our mitigation strategy to the extent circumstances change. In the 6 months that I've been in my role at the company, I've had the pleasure of meeting with more than 50 of our customers, gaining insights into our past performance and an understanding of their technology road maps. We seem well aligned on both fronts, and our customers are eager to transform their guest and staff experiences, leveraging the VCP. Nick, Benny and Darren will now provide examples of our early success in implementing this go-forward strategy. I'll now turn the call over to Nick to discuss our product updates. Nick?

Thanks, Jim. Good morning, everyone. At the end of the quarter, we had nearly 78,000 sites connected to the Voyix Commerce Platform, an increase of 16% year-over-year. As a reminder, the VCP was originally developed to connect legacy applications to the cloud. And going forward, we will leverage its cloud architecture and Edge micro services to deliver our Voyix point-of-sale and Voyix self-checkout. We continue to execute on our platform and related product initiatives, including the development and rollout of our cloud solutions, the continuous innovation of our micro services architecture and Edge services and the connection of our legacy customers to the VCP. I'd like to discuss 4 key examples that illustrate this progress and the positive outcomes it is driving for our customers and our business. The first is consumer transaction volume flowing through the VCP. In the first half of 2025, volumes were more than 50% higher than the prior year, and the VCP processed more than 500 million transaction API calls in June alone. This growth was driven by the increase in platform connected customers who benefit from greater real-time visibility into end-user purchasing behavior and the integration of these data flows into their business processes. The second is the number of consumer orders running through the VCP. This increased nearly 60% in the first half of 2025 compared to the prior year with over 75 million orders processed this June, underlying the platform's performance, scalability and stability. The third highly innovative example is our existing customers' rapid adoption of Picklist Assist, our AI-enabled computer vision capability for self- checkout. Available through the VCP, Picklist Assist utilizes computer vision via cameras already built into most of our grocery self-checkout scanners to identify and present a short list of most likely items based on color, weight and other characteristics. This proprietary software technology can be used with both our legacy and cloud-based checkouts to improve speed, accuracy and efficiency, enhancing outcomes for both retailers and their end customers. We've already implemented Picklist Assist across more than 22,000 checkout lanes worldwide and continue to see strong market interest in this feature. The fourth is the increasing adoption of our Edge virtualization solution that enables our customers to operate their stores with the speed and efficiencies of running their digital channels. This year, we have continued to implement Edge for major retailers to improve store outcomes. For example, during the quarter, one of our large Edge customers in Europe was able to address a business requirement to trial a new kiosk with a new hardware device and implement a working solution in less than 2 weeks. Edge not only significantly improved the speed to market of such an application by months, but also enabled them to bypass a lengthy certification process. Each of these examples, like our other VCP solutions, contributes towards software ARR growth from our platform sites and are normally packaged as an add-on to a point-of-sale or self- checkout subscription. One of the biggest shifts we see in the market is the desire for enterprise brands to transform their stores to create modern experiences for shoppers and modern ease of IT teams that mirror their digital channels. Cloud-native technologies leveraging micro services, whilst common in digital commerce are less so in brick-and-mortar stores. We have been investing in this type of software architecture for 5 years, and it is quickly becoming a compelling competitive advantage. With that, I will turn the call over to Benny to discuss our restaurant's performance. Benny?

Thanks, Nick. In the second quarter, our restaurant business signed more than 200 new software and services customers. Our platform and payment sites increased 4% and 1%, respectively. Software ARR increased 4% and total ARR increased 3% in the quarter. NCR Voyix has long been a trusted partner for enterprise restaurants, and we continue to deepen our relationships and expand our product and services offering in this space. This year, we've made significant progress on our sales transformation efforts, including hiring Miguel Solares as the Senior Vice President and Chief Revenue Officer and other key sales leaders. We are already seeing meaningful improvements in our customer satisfaction, global expansion and sales pipeline. This quarter, we expanded our long-standing services relationship with a large global coffee chain to provide enhanced drive-thru support for their stores in the U.S. and Canada. This follows our recent international expansion with this customer as discussed on our Q3 call in November, and we expect to continue to broaden our services contract with them over time. We also completed the services rollout for the large global fast food chain in the U.K. we announced on our February call, which will deliver strong recurring revenue for our business in the second half of the year. This is an example of the strength of our services division and its ability to support global brands with consistent high-quality solutions across geographies. We are continuing to expand our enterprise restaurant offering internationally, leveraging our existing global retail operations. Given Latin America's high software adoption at the point of sale, this region will be a focus as we drive the adoption of Aloha outside the U.S. Our retail business today has strong market share in Mexico, Chile, Peru and Argentina, and we are positioned to build a similar presence with restaurants over time. In addition to our enterprise expansion efforts, we're also enhancing our commitment to small and mid-market restaurants through direct and third-party relationships. Mid-market brands are increasingly looking for a scalable all-in-one platform. NCR Voyix delivers a true store-in-a-box experience, combining point-of-sale payments and operational tools to simplify technology for franchisees and accelerate same-store growth. Our wall-to-wall services are especially resonating with operators who want enterprise-grade capabilities tailored to emerging brands. For example, we recently renewed agreements with several mid-market restaurants in the Southeast as they continue to leverage our extensive service capabilities to grow and scale their businesses. I will now turn the call over to Darren to discuss our retail performance. Darren?

Thanks, Benny. Good morning, everyone. In the second quarter, our retail business signed nearly 50 software and service customers. Our platform and payment sites increased 25% and 13%, respectively. Software ARR increased 9% and total ARR increased 6% in the quarter. As previously mentioned, this quarter, we continued to introduce our VCP applications to new and existing customers. For example, in Japan, we signed contracts with a national grocery chain and a large drugstore chain for both Voyix point-of-sale and self- checkout, displacing 2 separate competitors with our leading solutions. In the U.K., we signed a 5-year Voyix point-of-sale and self- checkout agreement with one of the fastest-growing supermarket chains in the market and a long-standing customer of NCR Voyix. In addition to point-of-sale and self-checkout, we will also provide hosting and loyalty solutions for their 1,000 store footprint. Further, this is the third market-leading grocer in the U.K. to adopt our latest solutions. We have now signed agreements with more than 10 grocery, fuel and convenience customers across North America, Europe and Japan to implement Voyix point-of-sale and self-checkout and other cloud-based solutions across entire store estates through the end of next year. In services, we signed a new multiyear agreement with one of the largest discount department store chains to install back office and point-of-sale hardware across nearly 4,000 sites in the U.S. and Canada. We will look to expand our relationship with this customer over time. Lastly, in our government business, we recently signed an expanded agreement with a large long-standing customer to provide more than 14,000 point-of-sale terminals across their retail footprint. With that, I will turn the call over to Brian. Brian?

Thank you, Darren, and good morning, everyone. For the quarter, we delivered revenue and adjusted EBITDA in line with expectations. Total revenue of $666 million declined 8% due to continued softness in hardware sales. Recurring revenue increased 4% to $422 million and as a percent of total revenue improved over 700 basis points to 63%. Software ARR and total segment ARR increased 7% and 5%, respectively. Platform sites increased 16% to 78,000 sites and payment sites increased 3% to 8,400 sites. Adjusted EBITDA of $95 million increased 20% in the second quarter as margin expanded 340 basis points to 14.3%. This was largely driven by our previously discussed cost actions. Let's turn to our segment results. Beginning with restaurants, recurring revenue increased 4% to $143 million, and total segment revenue increased 2% to $205 million due to an increase in payments and recurring services revenue. Segment adjusted EBITDA increased 10% to $68 million as margin expanded 240 basis points to 33.2%. This improvement was driven by our efficiency initiatives and our software and services sales mix. Turning to retail. Recurring revenue increased 5% to $277 million, driven primarily by the ramp of a new large customer agreement and platform revenue growth. Total segment revenue declined 12% to $454 million due to the previously mentioned decline in hardware sales. Segment adjusted EBITDA decreased 7% to $81 million, primarily due to the declines in hardware revenue, but absolute EBITDA improved sequentially from the first quarter. Adjusted EBITDA margin of 17.8% expanded 100 basis points year- over-year. Lastly, corporate and other expenses decreased 23% to $54 million, which reflects the previously discussed cost initiatives. Adjusted free cash flow was $37 million for the quarter before considering $24 million of restructuring cash expenditures, $284 million of cash taxes related to the sale of digital banking and $5 million of accelerated product investments. We invested $42 million in capital expenditures during the quarter and $81 million for the first half of 2025. Over 80% of CapEx was related to software investments. Our net leverage position was 1.9x at the end of the second quarter based on our net debt as of June 30 and the midpoint of our full year adjusted EBITDA outlook. Turning to our outlook. We continue to expect revenue to range from $2.575 billion to $2.65 billion and adjusted EBITDA to range from $420 million to $445 million. Non-GAAP diluted EPS is expected to be between $0.75 and $0.80, and adjusted free cash flow is expected to be between $170 million and $190 million. With that, I'll turn the call back over to Jim for closing remarks. Jim?

In closing, I'm pleased with the commitment and progress the team has demonstrated in the first half of the year. More importantly, with the benefit of being in my new role for almost 6 months, I'm increasingly convinced that NCR Voyix can advance the foundational strengths I've outlined on my first call in February. Our competitive position remains strong, and this is despite some past deficiencies and consistently demonstrating urgency and execution to some of our valued customers. I believe our collective efforts over the past 6 months are beginning to change perception in a positive way, which is reflected in our recent success in the market and our improving ARR performance. I'm encouraged by the cultural shift, together with our ongoing product innovation efforts, increased focus on our global service offering, enhanced payment strategy and our ability to continue these efforts to deliver value for our customers and our shareholders. I'll now turn the call over to the operator to begin the question-and-answer section. Operator?

[Operator Instructions] Our first question comes from the line of Dan Perlin with RBC Capital Markets.

Jim, I just wanted to talk about maybe the demand environment across both retail and restaurant. Are there any noticeable kind of differences or willingness to kind of invest in the current backdrop? I mean you're winning a lot of clients. So clearly, there's a demonstration of value there. But I'm just wondering, you're doing this in what seems to be a difficult environment. And I'm just wondering if that could actually improve to the extent that there's some pushback from clients today.

Thanks, Dan. I would say we have not seen any pullback from customers. As I mentioned in my prepared comments, I've met with now over 50 of our larger customers, and most of them are very focused. I think we already have 13 or so that have committed to our next-gen solution, Voyix POS and self-checkout. So I don't see necessarily a slowdown in terms of what they're looking to do to modernize their infrastructure. I mean you listen to the comments that Nick made around the investments and the benefits from Edge and our other applications that they're now having a chance to see in our labs. And so my impression is that the market is strong for us. Our customers have been on applications that date back 15 and 20 years or so. So I think they're all very interested in moving rapidly to enhance their business for all the reasons that we've outlined in the past. But maybe, Darren, you want to add anything to it?

Yes, sure. Dan, on the retail side, as I had in my prepared remarks, we signed nearly 50 customers. And we saw a good spread of demand across kind of the 4 key tenants of the retail proposition being hardware, software, services and payments. So it's a good spread across the product portfolio. So we're encouraged by the consistent demand from customers, engagement with customers and take-up of propositions. So I'll hand over to Benny on the restaurant side.

Yes. Similar comments on the restaurant side as well. As you saw in the prepared remarks, some of the growth that we're seeing is very encouraging. And then to your point, given the market pressure, in fact, customers are looking on how do I improve customer experience. So that's important, getting customers back into the restaurants. So any technology that helps around that, which is one of our key value propositions. And the other one is also driving cost down and improve their employees' engagement as well, which is again our value proposition. So in fact, as a result of some of the economic conditions, we are seeing uptick of interest.

Yes, Dan, I would -- one last point to this, where the company has historically supported its existing customer base dating back to the acquisition, so the software applications they bought, what we're focusing the sales organization on is expanding into new logos, new relationships. And some of what Darren mentioned earlier represent new logos, not where Benny would see it more often in the SME space. We're starting to see it because of the applications that we have in the market. I mentioned in the -- I guess it was the first earnings call that I was on, which was year-end call that we're moving away from selling the legacy applications in favor of our next- gen Voyix POS and Voyix Self-checkout. So we're seeing it not just with the existing base interested in upgrading, but we're definitely seeing new entrants to the base.

That's great. That's great color. Just a quick follow-up on free cash flow, clearly better in the current quarter than what we saw in the first quarter. Still, there's a pretty material ramp that's required to get you to the $170 million to $190 million guidance. Also understanding your second half trends tend to be more strong for free cash flow. But I'm just wondering, are there any kind of key components that we should be mindful of and then kind of level of visibility that you have going into the second half on the free cash flow side?

Yes. Thanks, Dan. So what I would say is Q2 was in line with our expectations on free cash flow. And to your point, we tend to generate our free cash flow in the second half. And EBITDA is expected -- absolute EBITDA and EBITDA margins are expected to ramp as we go through the second half based on our cost work and ramping revenue from last year. So that in the normal seasonality is weighting free cash flow more to the second half. I would point out that CapEx, we expect that to continue at the Q2 rate. So we'll probably be closer to about $170 million of CapEx versus the original $150 million. But we have good visibility, and we're comfortable with our guidance range.

Our next question comes from the line of Ian Zaffino with Oppenheimer & Company.

This is Isaac Sellhausen on for Ian. I just had one on restaurants EBITDA margin. Could you help us better understand what drove the strength in the quarter? It sounded like that's primarily on the growth of software and higher mix as well as some cost initiatives. Maybe just any kind of color you can give on that and then expectations for segment margins as you progress through the year?

Yes. So I'd say good software and services growth and recurring revenue growth in restaurants is helping margin, payments growth, software platform growth. And restaurants has had a good consistent margin this year, last year, and we expect that to continue. We see restaurants finishing the year about 32%, which implies pretty consistent from what we saw in the first half. On the retail side, we expect improvement in margin in the second half from what we saw in the first half. That's where we've had hardware margin pressure that did improve quarter-over-quarter, Q1 to Q2, and we expect to see that continued improvement as we get in the second half with revenue ramping and our cost actions that we're taking. And retail should be at about 18% to 19% for the full year.

I would amplify on the payment side. Clearly, the restaurant organization, which has been involved with payments for the last, I don't know, 4 or 5 years whenever JetPay was initially acquired. Now with the Worldpay point of -- excuse me, processing capability, we'll be able to sell point of sale on the retail side. So we would expect going into next year, increasing lift there as well on a margin basis from payments.

Okay. That's very helpful. And then just as a quick follow-up on the tariff exposure. I believe the $8 million to $12 million range is the same as last quarter. So maybe any additional details you can provide on any kind of mitigating actions that you're taking either through pricing or the [indiscernible] side and maybe how conversations have gone with suppliers?

Well, we checked the news this morning, unlike last time when a tweak came out that we were unaware of. Look, it's obviously a rapidly moving landscape. I think I counted something like 25 or so tweets that came out relative to tariffs. I read the articles this morning. There's more news out there. For now, we feel comfortable in the range that we just outlined. But I also mentioned in my prepared comments, initially, when this started, my initial -- my expectation was this was somewhat transitory. It was not going to persist. But just watching the news, reading what's out there, my sense is this is not going to end sometime soon. So I think we're going to have a different conversation in the back half of the year with our customers that either buy our services or buy hardware from us directly because at some point, this is going to be -- if this is permanent, then it's going to need to be more of a shared expense as opposed to our expense.

Our next question comes from the line of Will Nance with Goldman Sachs.

You mentioned in response to a prior question, some of the cost savings initiatives in the back half of the year. I was wondering if you could just update us on the various initiatives that you have planned in place for this year and anything into next year? And just kind of remind us where we are in each of those processes.

Sure, Will. So if I think about our cost program for this year, we sized it at $100 million, 2/3 is around vendor spend, 1/3 around our own labor. And those -- that program is largely executed or being executed. About 40% of the savings hit in the first half and about 60% will hit in the second half. And then we're starting to plan for next year, and it's a little premature to talk about next year, but we'll talk about that in the next quarter or 2.

Got it. Appreciate that. And then I was wondering if you could talk about the Buffalo Wild Wings renewal. Was that a competitive process? How did the RFP go, if so? And what do you think was kind of the tipping point to get to renewal on that contract specifically?

Yes. I'm going to have Benny do that. But I mean, we'll be somewhat limited on specifics. We don't generally comment specifically on a customer per se, but I think we can give you some color on this.

Yes. I think I would highlight 3 things. That's also showing up in all of our business today. I think 3 things happened. One is the transformation of the team, the sales team and the leadership that we've brought in has improved our relationship, how we show up, how we engage. Yes, that was an RFP engagement. The second thing is our investment in our product. We've talked about some of the solutions and capabilities that we've brought on and we continue to bring. So this is not just about what we brought on over the past 12 months, but it's also how we're investing in our strategy for the next 24 months, key capabilities that they're looking to leverage. And then the third thing is, I would say this is a very deep relationship, very similar to most of the relationship we have across the base. And that means it's not just one facet, it's multifaceted. So I wouldn't attribute it to just one thing, but all these multiyear relationships that we have continue to drive the momentum.

Yes. I'm going to add some color to it as well, not directly involved with this, although have a relationship with the company. If you look at what NCR has gone through over the last several years between the split, the divestitures that we did last year, there's a lot of change that has gone on in the company. And as a -- before the split, this was a very large organization with a lot of moving parts and a lot of mouths to feed. Today, we are singularly focused on software. And I think that has resonated last year and in particular, in the last 6 months with our customers. As I said, I've seen 50 customers myself, but every one of the executives have been on the road extensively. Beyond the account executives and the people in the field, they're starting to see executives, probably some of them for the first time in a long time. So there is somewhat of a reawakening in our relationships with these long-standing relationships. These are extremely important to us. These are leading organizations across -- here in the U.S., but really across the world. And they're looking to continue the relationship. That's my -- express my impression from the meetings that I've had. They're looking to continue these relationships we've been there with for a very long period of time. Change is very hard at the point of sale. We have what we believe the leading applications in the market, especially what Nick has outlined with our next-generation solutions. So I think it's very -- I think you should expect, as we've said in the past, and it continued into this quarter, our attrition rate -- revenue attrition rate is still at 1%. So customers are staying because they like working with, they believe in the company, and we're committed to their success.

Our next question comes from the line of Kartik Mehta with Northcoast Research.

It seems like you're starting to have success with the payment business. And I'm wondering, how do you envision that business progressing over the next 12 to 18 months?

Good question, Kartik. Thank you. Look, I mean, as you well know, I've been doing that for most of my career. We are learning the capabilities of the company, both from a point of sale now with Worldpay, but our own internal capabilities with Voyix Pay, our Works Connect, our internal gateway capabilities. I think in the past, NCR's view was they were not in a payments space. I mean, until they bought JetPay and even then JetPay was just too small of an application or a processor to be able to handle the size of these customers. So my impression is that customers, just like we see in restaurant, they're going to want, especially new customers, one relationship to provide all the services that we offer. And payments is obviously critical. The point of sale is the most critical, but it's only as good as the payments that continue. I've seen a number of examples where there's a variety of intermediaries between us and the actual processor. And what we're looking to do is streamline it. So thus far, we've had very good success with the mid-market on the retail side, we are beginning to engage with the larger customers. Again, this is domestically, for both retail and restaurant. The customers, especially restaurants in the past, again, given the size of the JetPay's capabilities or its processing capabilities, I think larger restaurants were concerned to do business with that application. But that doesn't exist with Worldpay. So I think Benny has been very active as is Miguel and the rest of his team engaging in conversations. So I think we'll start to see -- again, we're not on that system until, I guess, the fourth quarter, end of the third quarter, beginning of the fourth quarter. So I would see it ramping into next year. It's not going to happen overnight. It's not as though we bought a portfolio and it just lights up like days of the past in payments. But these are long-term relationships. They trust us. And now we have capabilities that we've never had before. And so we're going to make those available beginning in the fourth quarter. On the payment side, we've already begun aggressively on the gateway side to be able to displace competitors that have somehow over the years, found their way in.

To add a little bit of color, Kartik. As Jim said, domestically, strong and have the full end-to-end proposition here in the U.S. We're in a good position on the gateway across multiple international markets, and we're actively standing up the pay capability in EMEA, which is our second biggest retail market. So that will follow through to next year.

One more point that Darren just mentioned that maybe think of it, with the Global Payments acquisition of Worldpay, my former company, Global Payments as well as EVO embedded in that organization gives us greater reach, especially across Europe into Asia, Asia Pacific and into South America. So the combination of those 2 companies, leaders in their space makes it even more attractive for us to be able to form a relationship with our customers to provide services in more markets than we would have been able to with just Worldpay previously.

That's good. Just one question, Benny, on the restaurant side, there's been -- it seems like competition is increasing on that side, at least over the last 6 months. And I'm wondering if you're witnessing that the competition increasing or if you think it's been about the same. Just your perspective on how the market is right now.

Thanks, Kartik. Look, I think the restaurant space has been innovative, especially post the pandemic. We've seen a lot of start-up smaller players entering the market. I wouldn't say the past 6 months has been any different since I have arrived. I think what gives me a lot of confidence is the few things that Jim and I discussed when we talked about Buffalo Wild Wings, which is, I think, our entrenched position, our customer sentiment towards the transformation and then showing up the new culture, the investment and the focus. So I wouldn't especially call out anything different over the past 6 months.

Yes. One other point of this, I think, in particular, on the restaurant side because I think we get compared against others who are public or not companies is NCR Voyix is predominantly an enterprise company. If you look at the relationships, the brands that we support, these are enterprise organizations. The SME market on restaurant really is borne out of the Aloha acquisition. So yes, we continue to support that market. It's an important market for us. But ultimately, where the company plays is at an enterprise -- upper mid-market and enterprise level. And I think on that score, we are seeing less of the competition maybe than what you're thinking of.

[Operator Instructions] Our next question comes from the line of Parker Lane with Stifel.

This is Jack McShane on for Parker. I'm curious -- so the team once provided CAGR expectations through 2027 that showed restaurant outpacing retail growth by a point or 2. This has proved out from a revenue perspective, but the opposite seems to be true for ARR. Can you provide a little more color here? Would you expect this trend to shift? And maybe it's just the simple factor of quicker retail adoption of platform. But yes, a little more color here would be helpful.

Yes. I would suggest, and as Benny put in his comments, during the spin and shortly thereafter the spin, there was a lot of dislocation at the executive level, in particular, on the restaurant side more so than the retail side. There's a number of dynamics here that caused that to occur. And so we only just recently reestablished the entire leadership team underneath Benny in the last -- in this first quarter of this year or first half of this year. So I think trends that maybe were discussed several years ago, I actually wasn't here, so I don't know exactly when that would have occurred. I think those trends will change fairly rapidly over the next 6 to 12 months and probably be more in line with expectations previously. But again, the disruption of going through a split of which I've seen that firsthand in another company, that is a big change for the organization. It was a change for the better, as I said earlier. But I think on the retail side, which represents a significantly larger piece of business because it's more global, that organization largely stayed intact. Now we've made a number of changes since I've joined almost in each of the regions. But we have a very strong core group of people across the markets. And the newest product to market on our Voyix POS side on the platform side, that has been promoted pretty significantly over the last 12 months, not the same on the restaurant side, not at least at this point in time. Do you want to add anything?

Yes, on the payment side, up 3% this quarter. Is it in line with expectations internally? And where do you think we can expect to see that go under the Worldpay partnership?

Yes. I think as I said last -- I don't know that I'm going to give a long-term forecast on it, but I think it will be significantly bigger than that number because you're talking about -- we have probably 450 very large customers that today don't take payments. Today, what you're seeing in payments is exclusively -- almost exclusively SME and more on the smaller side than even the midsize. And that's almost exclusively on the restaurant side, more so than the restaurant -- the retail side. Plus we have -- we look at ourselves as 4 regions: Latin America, U.S., Canada, Europe, Asia and then Japan. And other than the U.S., we're really not promoting payments in any other way. So I think you'll see significant growth. Timing, we expect to begin to see and be able to show you in the first half of next year. But at this point, everything is very positive. The conversations we've had, the wins we've already had with customers, both on gateway and payments, I think will continue. And the best evidence is on the restaurant side, all new customers that come in through our SME organization, it's almost 100%. So it will look exactly like we outlined. I think in all the other ones, it will take a little longer because they have existing relationships. These are bigger organizations. But in the end, we're offering them one relationship as opposed to dealing with a multitude of relationships. And while that may sound somewhat trivial, when there's a problem, when you can't get your system to work because of a disconnect between the point of sale and the processor, then I can assure you, lots of phones start to ring very aggressively. So having one relationship all the way to the end is absolutely a selling feature. It's not something unique to us. There's plenty of other software companies that have been doing this for a number of years. It's just not something that NCR embraced years ago, and we're embracing it now. So I have high expectations that payments are going to be a meaningful part of our revenue going forward.

Our next question comes from the line of Alex Neumann with Stephens Inc.

So lots of good new customer signing here within restaurant and retail. I was wondering if you could size the amount of ARR in backlog for implementation or the change in backlog? Just any color here as we think about the forward software revenue growth here.

Yes, I'll start this. If you look at a trend, I don't have the piece of paper in front of me. If you look at our trend from last year to where we are now, actually, this goes back to '23. I think ARR -- software ARR was something around $700 million. It's approaching $800 million today. So it is definitely moving in a very positive direction. And that's during a period of a spin of sales of businesses. I mean there's just a lot of clutter in that. I can't overemphasize how different an organization, even from the time that I was the Chairman to where now I'm the CEO, that the focus has only enhanced because of all the good work that was done last year to fix the balance sheet and deal with some other structural issues. It's much more focused now on getting the new products out. That's what's planning for NRF. That's what Nick has been working on together with our CIO, Johnson. So I would expect you'll continue to see that grow. And as we actually bring on these -- launch the Voyix POS into the marketplace, I think you'll see somewhat explosive growth in those numbers.

Yes. And from -- Alex, on the retail side, you've seen the mix shift in terms of what's been happening on the hardware trends and per my prepared remarks of 50 customers were predominantly software and services with the corresponding growth in platform and payment sites. So kind of the mix shift is trending to recurring. So per your ARR comment, I think you'll see the tailwinds follow that rather than the typical onetime hardware. Benny?

Very similar on the restaurant side, continued mix shift towards software and services. And in those mixes, recurring versus onetime, I think the other shift that we're seeing is when we form these relationships, those relationships tend to be multifaceted. So it's not just software, it's software and services, and it's not just POS, but it's also the POS and some of the add-on functionalities like loyalty, like the Smart Manager for the POS or your back office, et cetera. Those are driving the ARR lift that we're seeing, and we're excited about it.

Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Kelly for any final comments.

Thank you, operator, and thank you all for joining the call today and your continued interest in NCR Voyix.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.