INVESTOR PRESENTATION
NOTES TO INVESTORS FORWARD-LOOKING STATEMENTS. These materials contain forward-looking statements. Statements that describe or relate to NCR's plans, goals, intentions, strategies, or financial outlook, and statements that do not relate to historical or current fact, are examples of forward-looking statements. The forward-looking statements in these materials include statements about the evolution of omni-channel; trends in backlog and fine value in NCR’s Services business; the expected areas of focus for NCR’s Services segment in 2017; momentum and fourth quarter growth in self-checkout revenue; NCR’s solution offerings and their alignment with major market trends and customer demands; NCR’s areas of focus to drive momentum going into 2018; expectations for margin expansion and the drivers of margin expansion; the expected drivers of NCR’s growth; and the prioritization of free cash flow generation and a balanced capital allocation strategy. Forward-looking statements are not guarantees of future performance, and there are a number of important factors that could cause actual outcomes and results to differ materially from the results contemplated by such forward-looking statements, including those factors listed in Item 1a "Risk Factors" of NCR's Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 24, 2017, and those factors detailed from time to time in NCR's other SEC reports. These materials are dated November 15, 2017, and NCR does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. NON-GAAP MEASURES. While NCR reports its results in accordance with generally accepted accounting principles in the United States (GAAP), comments made during this conference call and in these materials will include or make reference to certain "non-GAAP" measures, including: selected measures, such as period-over-period revenue growth, expressed on a constant currency basis and excluding the results of our former Interactive Printer Solutions business, gross margin rate (non-GAAP), operating income margin rate (non-GAAP), free cash flow (FCF), free cash flow as a percentage of non-GAAP net income (or free cash flow conversion rate), net debt, adjusted EBITDA, the ratio of net debt to adjusted EBITDA, operating income (non-GAAP), interest and net income (non-GAAP). These measures are included to provide additional useful information regarding NCR's financial results, and are not a substitute for their comparable GAAP measures. Explanations of these non- GAAP measures, and reconciliations of these non-GAAP measures to their directly comparable GAAP measures, are included in the accompanying "Supplementary Materials" and are available on the Investor Relations page of NCR's website at www.ncr.com. Descriptions of many of these non-GAAP measures are also included in NCR's SEC reports. USE OF CERTAIN TERMS. As used in these materials, (i) the term "recurring revenue" means the sum of cloud, hardware maintenance and software maintenance revenue, (ii) the term “net annual contract value” or “net ACV” for any particular period means NCR’s net bookings for cloud revenue during the period, and is calculated as twelve months of expected subscription revenues under new cloud contracts during such period less twelve months of subscription revenues under cloud contracts that expired or were terminated during such period, adjusted for twelve months of expected pricing discounts or price increases from renewals of existing contracts, and (iii) the term "CC" means constant currency. These presentation materials and the associated remarks made during this presentation are integrally related and are intended to be presented and understood together. 2
VISION TO EXECUTION Radiant Scopus Retalix Blackstone Acquisition Alliance Acquisition Alaric and Mobiqa SDM NCR Launches IPS Digital Insight Acquisition ‘Silver’ Technology Divestiture Acquisition Released 2005: Rebuilding our foundation Foundation for growth: 2016 and beyond Pension Strategy Pension Strategy Pension Strategy Teradata Corporate HQ Columbus, GA Manufacturing Phase 3 Phase 2 Move To GA Manufacturing Phase 1 Spin-off Restructuring Facility Dundee to Budapest Puducherry India Manaus, Brazil R&D Manufacturing Facility Manufacturing Facility FY 2005 FY 2016 FY 2005 FY 2016 FY 2005 FY 2016 REVENUE GROSS MARGIN RATE OI MARGIN RATE (NON-GAAP) (NON-GAAP) $4.6B $6.6B 22% 29% 6% 13% 3 3
NCR MARKET LEADERSHIP 1 • Restaurant Software • Omni-Channel Software • Stadium Food & Beverage Solutions • Multi-vendor ATM Software • Self–Checkout Solutions • Deposit Automation # • Global POS Software • Branch Transformation HW & SW • NCR is the leader in Forrester’s Point–of– • Mobile banking end-user app store Service Report ratings in the US • NCR recognized as IHL’s Next POS & • Restaurant Solutions (HW/SW/Services) Mobile POS Software Purchase SOFTWARE HARDWARE SERVICES 4 Sources: IDC, RBR, MagnifyMoney, Chain Store Guide, PwC and NCR
ENABLING NEARLY 700 MILLION TRANSACTIONS EVERY SINGLE DAY NCR SERVICES 8 OF THE NCR SERVICES ARE HERE CENTERS RESPOND TO NCR POWERS TO SUPPORT OUR CUSTOMERS TOP 10 DOLLARS IN CASH MOBILE WORLDWIDE, GOES THROUGH NCR BANKING APPS EVERY SECOND CUSTOMER INCIDENTS ATMs EACH YEAR SPEAKING ARE POWERED EACH YEAR BY NCR’S DIGITAL INSIGHT CONSUMERS USING FASTLANE AND SPANNING FROM: SELFSERV CHECKOUTS SCAN 160,000 CLOUD THE WEST …TO THE FAR COAST OF THE EAST OF EVERY YEAR – OVER 6 ITEMS FOR APPLICATIONS US… RUSSIA EVERY MAN, WOMAN AND CHILD ON EARTH. RUNNING IN RESTAURANTS WORLDWIDE NCR CONNECTED PAYMENTS CURRENTLY NCR FACILITATES ATM’S + APTRA SOFTWARE SERVE OVER PROTECTS MORE THAN AND MORE THAN MORE THAN TWITTER ANNUALLY (SPECIALIZES IN CLOUD, MOBILE eWALLET AND IPHONE COMBINED EVERY SECOND PAYMENTS) 5 Source: Internal Company Statistics
2020 – THE EVOLUTION OF OMNI-CHANNEL These four areas will gain increasingly larger shares of Mobile Big Data capital spending, Devices R&D investment, and private capital formation The Internet of Things The Cloud 6
OMNI-CHANNEL MARKET NCR’s strategic offers include: OMNI-CHANNEL CHANNEL TRANSFORMATION DIGITAL ENABLEMENT SOFTWARE • Enables revenue growth, productivity gains, and • Enables new business models driven modernized consumer experiences from the by the growing digitalization movement • NCR's Omni-Channel Platform Hub transformation of physical and digital channels • Solutions include: Real-Time Actionable and Applications • Solutions include: Branch, Insights, Loyalty, Cloud/ATM Security, • Enables seamless consumer Loss & Fraud Prevention, Inventory and • Store, Restaurant, and Venue Transformation experiences across physical and digital Labor Management, Cash • Drives smart-edge offerings: ATMs, SCO, mPOS, channels Management, Secure Payments, ePOS, Peripherals • Solutions Include: Retail One, Customer Transaction Processing, Remote • Drives service offerings: Consulting Services, Experience Platform (CxP), Aloha Deposit, Digital Check Processing Implementation Services, Hardware Maintenance, Enterprise, NCR Silver Managed Services, High Availability 7
GROWING SOFTWARE AND RECURRING REVENUE Software Revenue CAGR of 21% SOFTWARE $1.84B $593M FY 2010 FY 2016 Recurring Revenue CAGR of 7% 43% OF RECURRING REVENUE REVENUE 39% OF REVENUE FY 2010 FY 2016 8
SW REVENUE POSITIVELY IMPACTING MARGINS % OF TOTAL REVENUE Up ~530bp from 2010 GROSS MARGIN SOFTWARE SERVICES HARDWARE RATE (NON-GAAP) GROSS MARGIN RATE 28.8% (NON-GAAP) 23.5% 28% 13% 35% 42% 45% 37% FY 2010 FY 2016 9
FREE CASH FLOW GROWTH FCF CAGR of 54% Y/Y GROWTH 60% Conversion 56% 44% 67% 86% 132% 13% 36% Rate $628 $476 $475 $475 $469 $408 $335 $409 $279 $313 Net Income $207 (Non- $188 GAAP) $146 Free $37 Cash Flow FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 ($ in Millions) 10
Q3 2017 SEGMENT RESULTS Services Revenue Hardware Revenue Software Revenue Up 3% Down 7% Up 2% $618 CC CC CC $609 million $578 $591 million $476 million million $468 million million Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Software Gross Margin Services Gross Margin Hardware Gross Margin Up 460 Down 70 Down 540 51.1% bps CC bps CC bps CC 50.4% 26.3% 19.9% 21.8% 14.9% Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017
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