[caption id="attachment_86506" align="aligncenter" width="720"] Source: Company reports/Coresight Research[/caption]   1Q19 Results Diebold Nixdorf reported 1Q19 revenues of $1.03 billion, down 3.4% as reported but up 3.0% in constant currency, below the $1.05 billion consensus estimate.

• Service revenue was $544 million, down 8.1% as reported and down 2.9% in constant currency.
• Product revenue was $376 million, up 6.6% as reported and up 10.6% in constant currency.
• Software revenue was $283 million, down 4.3% as reported and up 3.0% in constant currency.

Management commented that the 60-bps expansion of GAAP gross margins was driven by operational initiatives, including service modernization, global manufacturing improvements and increased discipline in packaging and selling. Adjusted EPS was $(0.63), below $(0.13) in the year-ago quarter and below the $(0.35) consensus estimate. GAAP EPS was $(1.74), compared to $(0.97) in the year-ago quarter. Adjusted EBITDA was $65.1 million, up 5.3% from the year-ago quarter. Results by Segment

• Revenues in the Eurasia banking segment were $382.6 million, down 12.1% as reported and down 4.2% in constant currency. Revenues declined in Asia due to a focus on higher-margin business, the decision not to renew a low-margin contract in India, a divestiture, all somewhat offset by modest growth in the EMEA region. Within the segment:
  • Service revenues were $212.3 million, down 11.0% as reported and down 3.5% in constant currency.
  • Product revenues were $127.8 million, down 13.2% as reported and down 5.0% in constant currency.
  • Software revenues were $42.5 million, down 13.8% as reported and down 5.3% in constant currency.
• Revenues in the Americas banking segment were $362.7 million, up 8.7% as reported and up 10.6% in constant currency. Growth was strong year over year due to Windows 10 upgrades, growth in software, however, services were down slightly year over year. Within the segment:
  • Service revenues were $222.1 million, down 4.0% as reported and down 2.6% in constant currency.
  • Product revenues were $108.5 million, up 49.4% as reported and up 52.0% in constant currency.
  • Software revenues were $32.1 million, up 8.1% as reported and up 13.0% in constant currency.
• Revenues in the retail segment were $282.8 million, down 4.3% as reported and up 4.2% in constant currency. Product growth was led by Europe and the Americas, partially offset by decreases in services and software. Within the segment:
  • Service revenues were $109.8 million, down 10.2% as reported and down 2.3% in constant currency.
  • Product revenues were $139.4 million, up 5.1% as reported and up 14.2% in constant currency.
  • Software revenues were $33.6 million, down 17.0% as reported and down 8.9% in constant currency.

Implications for Retail Diebold Nixdorf is oriented towards retail, serving as an innovation partner to the majority of the top 25 global retailers. Its business is benefiting from the continued acceptance of its self-checkout and POS solutions, and the company won two major contracts during the quarter. Details from the Quarter Management commented that the combination of 3% revenue growth in constant currency plus benefits from the company’s DN Now transformation initiatives drove improved profitability and cash flow in the quarter. Management characterized order growth in the Americas as good, support by the company’s software and Windows 10 upgrade solutions. The company’s cash-recycling technology (which accepts cash deposits and provides cash) continues to resonate with customers in Europe. The global retail business is benefiting from acceptance of self-checkout and point-of-sale solutions. Management also commented that it continues to implement DN Now initiatives, including streamlining the company’s cost structure, intensifying its customer focus and evolving its connected e-commerce solutions. These actions are part of a three-year journey to create value and substantially improve financial performance. Retail Orders declined slightly in the quarter due to a tough comparison in the year-ago quarter. During the quarter, the company won a $60 million order from one of the world‘s largest fuel and convenience retailers to deploy a centralized card acceptance platform, which includes software licenses plus professional and maintenance services in 10 European markets. In addition, the company secured an $18 million contract with a French supermarket cooperative for 600 self-checkout systems and a four-year contract. Management characterized growth in self-checkout solutions in several European counties as good. Outlook The company reiterated its prior 2019 guidance:

• Revenues of $4.4-4.5 billion (down 2-4%).
• Adjusted EBITDA of $380-420 million (up 15-27%).