NATL Earning Date, Transcript Summary & Report

Team Accomplishments Highlighted: Reflecting on our first full year as an independent company and our best quarter yet, it is impossible to overstate what Atleos's team has accomplished.

Strong Financial Performance: For the full year 2024, we generated over $4.3 billion in revenue, $3.22 of adjusted EPS and over $242 million of adjusted free cash flow, all in line or above the financial targets we set out for the year.

Margin Expansion and Cost Efficiency: Margin expanded year-over-year and increased sequentially in each quarter, benefiting from an accretive revenue shift mix towards services coupled with cost productivity initiatives that accelerated across the year.

ATM Service Revenue Growth: In 2024, we generated 27% revenue growth in the ATM as a service full outsourcing product and grew software and services overall at 8%.

Customer Growth Achievement: We grew the number of unique customers by 50% in 2024 and finished the year with over 28,000 active devices.

Utility Banking Performance: The network segment is our utility banking business that consists of approximately 80,000 owned and operated ATMs located in blue chip retail locations. This business performed well in the fourth quarter and for the full year with financial results generally above our expectations.

EBITDA Margin Expansion: Adjusted EBITDA margin was 18.1% for 2024 and expanded 60 basis points from the prior year. What is even more impressive is that we increased margin 440 basis points over the course of the year.

Earnings Per Share Surge: Fourth quarter diluted adjusted earnings per share was up 73% year-over-year to $1.11 and exceeded expectations driven by better-than-expected profits and an effective tax rate lower than the prior year.

Record Free Cash Flow: During the fourth quarter, we generated an impressive $119 million of free cash flow. The fourth quarter is typically when we generate our highest free cash flow of the year, but this year was even better than we had expected due to the combination of strong profits, working capital management and the timing of cash taxes.

Revenue Growth Forecast: We expect total company revenue will grow 1% to 3% on a constant currency basis with FX again a 2% headwind.

Market Perception vs. Performance: Despite a strong overall performance, Atleos remains significantly undervalued relative to its peers, indicating a disconnect between operational success and market perception.

Investor Engagement Challenges: The company faced challenges with low equity investor interest, as daily trading volumes and investor engagement were described as 'too low'.

Balance Sheet Constraints: While revenue grew, the company is still constrained by its balance sheet, which may limit growth potential in the near term.

Crypto Transaction Decline: The company experienced a decline in its crypto transaction unit, LibertyX, which negatively impacted overall revenue growth in the network segment.

International Revenue Decline: The international revenue for the network segment saw a decrease of 2%, attributed to challenging prior year comparisons, indicating potential market volatility.

Foreign Exchange Impact: The company anticipates a 2% headwind from foreign exchange rates on reported results, which could impact revenue and EBITDA growth.

Flat Core Revenue Outlook: The first quarter of 2025 is expected to show flat core revenues, indicating potential stagnation in growth at the start of the year.

EBITDA Margin Decline: The network segment's adjusted EBITDA margin is projected to decrease due to higher bulk cash costs resulting from the expiration of hedges, which could affect profitability.

Negative Free Cash Flow Concerns: The company expects modestly negative free cash flow in the first quarter of 2025 due to working capital investments, which may raise concerns about liquidity in the short term.