Diebold Nixdorf, Incorporated

Q2 non-GAAP revenue was $928 million, up 1.4% year over year and more than 4% sequentially. Adjusted EBITDA was $121 million, up 8% year over year and about 22% sequentially, and adjusted EPS was $1.10, up 17% year over year and 64% sequentially. Non-GAAP gross margin was 26.4%, essentially flat year over year and up 100 basis points sequentially; product gross margin was 28.7% and service gross margin was 24.9%. Revenue by segment was down about 6% year over year in Banking and up 24%-25% year over year in Retail. The company reaffirmed full-year 2026 guidance: revenue of $3.86 billion to $3.94 billion, adjusted EBITDA of $510 million to $535 million, adjusted EPS of $5.25 to $5.75, and free cash flow of $255 million to $270 million, excluding about $50 million of higher-than-expected tax payments tied to 2024 and 2025. For Q3, management said revenue should be about 25% of full-year revenue at the midpoint, gross margin about 25% excluding the tariff refund, EBITDA about 24% of full-year EBITDA at the midpoint, and free cash flow should be around Q2 levels.

Octavio Marquez emphasized that commercial momentum remained strong and that the business is benefiting from a broader strategy beyond the ATM, especially in branch automation, teller cash recyclers, managed services and software. He highlighted record teller cash recycler shipments, new wins in the U.K., Mexico, South Africa and India, and said the retail business is still early in a significant long-term growth opportunity, particularly with Smart Vision AI. His tone was confident but pragmatic: he acknowledged memory-cost pressure, inventory buildup, and some revenue timing shifts, while reiterating confidence in the full-year outlook and in 2027-and-beyond cash flow.

Thomas Timko focused on the drivers behind margins, cash flow and capital allocation. He said Q2 revenue was $928 million, gross margin was 26.4%, adjusted EBITDA was $121 million, and EPS was $1.10; he also quantified a roughly $13 million tariff refund offset by about $10 million of higher memory costs. He noted free cash flow was an outflow of $11 million due mainly to about $40 million of inventory build, said operating expenses declined $7 million year over year and are now expected to fall about 2% for the full year, and highlighted liquidity of over $590 million, net leverage of 1.4x, and $60 million of share repurchases during the quarter.

Analysts pressed management on why Q4 needs to be so large to hit the full-year targets, and CFO Thomas Timko said the service-margin investment cycle was concentrated in Q2 and that the company still expects up to 50 basis points of service-margin expansion this year. On free cash flow, management explained that inventory should unwind in Q4, with additional support from better DSO and annual customer prepayments, and they reaffirmed the full-year cash target. Questions also focused on North American retail and pricing/memory costs; management said the business is seeing very high double-digit growth in North America, expects to pass through memory-cost increases with tighter quote windows, and sees no current impact from the Brink's/Atleos combination beyond validating their branch-automation strategy.