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ncratleoscorp-form10xkco

  August 9, 2024        Securities and Exchange Commission  Division of Corporation Finance  Office of Technology  100 F Street, NE  Washington, DC 20549    Attn: Melissa Kindelan   Christine Dietz    Re: NCR Atleos Corp  Form 10-K for the fiscal year ended December 31, 2023  Form 8-K/A Furnished March 26, 2024  Form 8-K Furnished May 13, 2024  File No. 001-41728  Ladies and Gentlemen:  NCR Atleos Corporation (“Atleos”, the “Company”, “we”, “us” or “our”) hereby submits  this letter in response to comments from staff (the “Staff”) of the U.S. Securities and Exchange  Commission (the “Commission”) received by letter dated July 15, 2024 (the “Comment Letter”)  relating to the Company’s Form 10-K for the fiscal year ended December 31, 2023 filed on  March 26, 2024, the Company’s Form 8-K/A furnished on March 26, 2024 and the Company’s  Form 8-K furnished on May 13, 2024.   The headings and paragraph numbers in this letter correspond to those contained in the  Comment Letter and, to facilitate the Staff’s review, we have reproduced the text of the Staff’s  Division of Corporation Finance, Office of Technology comments in bold and italicized type  below.   Form 10-K for the fiscal year ended December 31, 2023  Management’s Discussion and Analysis of Financial Condition and Results of Operations  Key Strategic Financial Metrics, page 46  1. We note you no longer disclose total units owned/managed/serviced; ATM-as-a- service; and payment transactions as performance metrics, which you indicated in your  response letter dated June 23, 2023, you use to monitor your ability to retain and grow  your customer base. We also note you currently disclose ATMaaS Units and ARR for  the self-service banking segment and self-service banking terminal network units and  LTM ARPU for the network segment as key strategic metrics in the supplemental  materials in the Form 8-K furnished on May 13, 2024. Please revise to incorporate  these measures included and discussed in the supplemental materials, and any other  measures used to monitor customer retention and renewals or otherwise evaluate your  business and monitor performance. Refer to SEC Release 33-10751.

August 9, 2024  Page Two        The Company respectfully acknowledges the Staff's comment and advises the Staff that  the Company considers revenue and adjusted EBITDA to be the most important metrics  on which the Company’s executives focus when evaluating the financial condition and  operating performance of the Company.  On October 16, 2023, Atleos was spun out from NCR Voyix Corporation (f/k/a NCR  Corporation), and the new management team was put in place. The Atleos management  team then re-evaluated which key performance indicators and metrics were necessary to  provide an understanding of its financial condition and results of operations.  With  respect to total units owned/managed/serviced and payment transactions, management  concluded that, due to the relative mix of units and transaction types, movement in these  metrics does not directly correlate to financial performance and could cause confusion  and misunderstanding of our operating results among investors.  As such, these metrics  are no longer used to measure business performance and were removed from our  disclosures.    The ATM as a Service (“ATMaaS”) units metric was removed from MD&A because it  relates to less than 4% of fiscal 2023 revenues (6% of fiscal 2023 Self-Service Banking  segment revenue) and therefore was not considered material to an understanding of our  results of operations and financial condition. However, Company management continues  to believe this metric may be useful to investors and management in measuring the  Company’s achievement of strategic goals related to the ATM as a Service business and  an understanding of changes in gross margin of the Self-Service Banking segment over  time. Therefore, we have continued to include this metric in our supplementary  information provided to investors and will revise our disclosures to incorporate this  measure into MD&A in future filings.  Regarding Annualized Recurring Revenue (“ARR”) for the Self-Service Banking  segment and last-twelve months average revenue per unit (“LTM ARPU”) for the  Network segment, we respectfully advise the Staff that these are supplementary metrics  provided to investors to assist them in evaluating the Company’s progression toward its  long-term strategic goals, but do not necessarily correlate to current period financial  outcomes; nor do we believe they enhance a reader’s understanding of MD&A.  Furthermore, management does not measure itself internally against these metrics. The  Company has nevertheless disclosed these metrics in supplementary materials because it  believes such disclosure could assist investors in understanding the conversion of the  business to recurring revenue streams and the improved monetization of our ATM fleet  over a specified period, excluding the impact of seasonality.  Self-service banking  terminal network units are disclosed in supplementary information to provide  transparency in the calculation of LTM ARPU and do not, on their own, represent a key  financial metric essential to the understanding of the Network business. Therefore, we  expect to continue to include these metrics in our supplementary information provided to  investors but do not plan to revise our disclosures to incorporate this measure into  MD&A.

August 9, 2024  Page Three        We will consider other key performance metrics on a forward-looking basis as the  Company’s business continues to evolve.  Consolidated Results  Gross Margin, page 49  2. We note your disclosure of a non-GAAP measure, gross margin as a percentage of  revenue excluding amounts such as, reserves on net assets transferred, amortization of  acquisition-related intangibles, and stock-based compensation expense; however, you  have not provided the disclosures required by Item 10(e)(1)(i) of Regulation S-K nor  have you labeled it as non-GAAP. Please revise to provide the required disclosures or  alternatively incorporate the quantitative impact of these items in your discussion of  the change in gross margin. Similar revisions should be made in your discussion on  selling, general and administrative expense as well as research and development  expenses.  The Company respectfully acknowledges the Staff’s comment, and we will revise the  relevant disclosure in future filings. Please see  Appendix A for our amended disclosure  examples.   Form 8-K/A Furnished March 26, 2024  Exhibit 99.2, page 30  3. We note your presentation of segment results on slides 29-31. Please explain your  intention in presenting slide 29 including the disclosure of income from operations by  segment and tell us whether your chief operating decision maker uses income from  operations when assessing performance. In this regard, we note that in your Form 10- K your disclosures on page 88 indicate that Adjusted EBITDA is your segment  measure of performance. Also, explain why the segment results in table 30 are labeled  as non-GAAP. Refer to Question 104.01 of the Non-GAAP C&DIs.  The Company respectfully acknowledges the Staff’s comment, and notes that we  included incremental information on our segments on slides 29-31, including the  disclosure of income from operations, for modeling purposes only at the request of  certain investor analysts.  Our Chief Operating Decision Maker (CODM) does not use  income from operations when assessing segment performance or deciding how to allocate  resources. The CODM only uses Adjusted EBITDA to assess segment performance and  allocate Company resources, and therefore we believe that this measure of segment profit  or loss is the appropriate measure to report in our Segment footnote under ASC 280-10- 50-28A.  We agree that Adjusted EBITDA on table 30 should not be labeled as non- GAAP as Adjusted EBITDA for the reportable segments is considered the Company’s  GAAP measure of segment profit or loss.  Please see Appendix B for our proposed  adjustments to Slides 29-31, which we will revise as presented in future materials  furnished to the Commission.

August 9, 2024  Page Four        Form 8-K Furnished May 13, 2024  Exhibit 99.1, page 1  4. Please revise the bullets on page 1 to present the comparable GAAP measures of net  loss and operating cash flow with equal or greater prominence to your non-GAAP  measures, adjusted EBITDA and adjusted free cash flow, respectively. Refer to  Question 102.10(a) of the non-GAAP C&DIs.  The Company respectfully acknowledges the Staff’s comment and will include the  comparable GAAP measures and disclosures with equal or greater prominence in future  reports and exhibits filed with the Commission and future earnings releases furnished to  the Commission.  * * *  In connection with our response to the Staff’s comments, we acknowledge that the  Company and its management are responsible for the accuracy and adequacy of its disclosures,  notwithstanding any review, comments, action or absence of action by the Staff.   Please direct any questions or comments regarding this letter to the undersigned at 770- 689-2190 or PaulJ.Campbell@ncratleos.com.  Sincerely,  /s/ Paul J. Campbell  Paul J. Campbell  Executive Vice President and  Chief Financial Officer  NCR Atleos Corp      cc: Ricardo J. Nuñez, NCR Atleos Corp    Keith M. Townsend, King & Spalding LLP   Trevor G. Pinkerton, King & Spalding LLP

    Appendix A

Appendix A        “Non-GAAP Financial Measures and Use of Certain Terms” will be revised to include  the following additional paragraph and table(s):  Adjusted gross margin as a percentage of revenue (non-GAAP), Adjusted selling, general  and administrative expenses as a percentage of revenue (non-GAAP) and Adjusted  research and development expenses as a percentage of revenue (non-GAAP). Atleos’  Adjusted gross margin rate (non-GAAP), Adjusted selling, general and administrative  expenses as a percent of revenue (non-GAAP) and Adjusted research and development  expenses as a percent of revenue (non-GAAP) are determined by excluding, as  applicable: acquisition-related costs; pension settlements, pension curtailments and  pension special termination benefits; separation-related costs; amortization of acquisition- related intangibles; stock-based compensation expense; transformation and restructuring  charges (which includes integration, severance and other exit and disposal costs); and  other special (expense) income items from Atleos’ GAAP gross margin, selling, general  and administrative expenses, and research and development expenses, respectively.   Due to the nature of these special items, Atleos’ management uses these non-GAAP  measures to evaluate year-over-year operating performance. Atleos believes these  measures are useful for investors because they may provide a more complete  understanding of Atleos’ underlying operational performance, as well as consistency and  comparability with Atleos’ past reports of financial results.   Reconciliation of Gross Margin Rate (Gross Margin as a Percentage of  Revenue) (GAAP) to Adjusted Gross Margin Rate (Adjusted Gross Margin  as a Percentage of Revenue) (Non-GAAP)   2023 2022 2021  Gross Margin Rate (GAAP) 22.3% 22.2% 25.1%  Plus: Special Items     Transformation and restructuring 0% 0.4% 0.4%  Stock-based compensation expense 0.5% 0.7% 1.0%  Acquisition-related amortization of  intangibles 1.5% 1.5% 0.9%  Separation costs  1.2% 0% 0%  Russia operations 0% 0.2% (0.1)%  Adjusted Gross Margin Rate            (Non-GAAP) 25.5% 25.0% 27.3%

Appendix A        Reconciliation of Selling, General and Administrative Expenses (“SG&A”) as  a Percentage of Revenue (GAAP) to Adjusted SG&A as a Percentage of  Revenue (Non-GAAP)   2023 2022 2021  SG&A as a percentage of revenue  (GAAP) 14.0% 14.2% 15.1%  Plus: Special Items     Transformation and restructuring (0.2)% (0.9)% (0.2)%  Stock-based compensation expense (1.1)% (0.8)% (1.2)%  Acquisition-related amortization of  intangibles (0.8)% (1.0)% (0.6)%  Separation costs  (2.3)% 0% 0%  Russia operations 0% (0.1)% 0%  Acquisition-related 0% (0.2)% (2.2)%  Adjusted SG&A as a percentage of  revenue (Non-GAAP) 9.6% 11.2% 10.9%      Reconciliation of Research and Development Expenses (“R&D”) as a  Percentage of Revenue (GAAP) to Adjusted R&D as a Percentage of  Revenue (Non-GAAP)     2023 2022 2021  R&D as a percentage of revenue  (GAAP) 1.8% 1.5% 3.0%  Plus: Special Items     Transformation and restructuring 0% (0.1)% (0.1)%  Stock-based compensation expense (0.1)% (0.1)% (0.1)%  Separation costs (0.1)% 0% 0%  Adjusted R&D as a percentage of  revenue (Non-GAAP) 1.6% 1.3% 2.8%

Appendix A        “Gross Margin” will be revised as follows:  Gross margin as a percentage of revenue was 22.3% in 2023 compared to 22.2%  in 2022. Gross margin for the year ended December 31, 2023 included $51 million of  reserves on net assets transferred and incremental retention costs paid out as part of the  Spin-off from Voyix, $65 million related to amortization of acquisition-related intangible  assets, $20 million of stock-based compensation expense, and $1 million related to  transformation and restructuring costs. Gross margin for the year ended December 31,  2022 included $60 million related to amortization of acquisition-related intangible assets,  $27 million of stock-based compensation expense, $17 million related to transformation  and restructuring costs, and $10 million related to operating losses, impairments and  other actions taken with respect to our operations in Russia. Excluding these items,  adjusted gross margin as a percentage of revenue (non-GAAP) increased slightly from  25.0% to 25.5%. Following the series of geopolitical and macroeconomic challenges that  had a significant impact on costs in the first and second quarters of 2022, we took action  to mitigate these impacts and have had reductions in fuel, shipping costs and component  parts cost compared to prior year which has improved our product gross margins by  approximately $64 million. These improvements were partially offset in our services  gross margin by increased interest rates driving $46 million of higher rental cost on our  vault cash agreements.    “Selling, General and Administrative Expenses” will be revised as follows:  Selling, general, and administrative expenses were $585 million in 2023, compared to  $586 million in 2022. As a percentage of revenue, selling, general and administrative  expenses were 14.0% in 2023 and 14.2% in 2022. In 2023, selling, general and  administrative expenses included $8 million of transformation and restructuring costs,  $43 million of stock-based compensation expense, $33 million of acquisition-related  amortization of intangibles, and $97 million in IT separation, consulting, audit, legal, and  incremental retention costs related to the Company’s Spin-off from Voyix. In 2022,  selling, general and administrative expenses included $38 million of transformation and  restructuring costs, $35 million of stock-based compensation expense, $40 million of  acquisition-related amortization of intangibles, $8 million of acquisition-related costs,  and $3 million of costs related to actions taken with respect to our operations in Russia.  Excluding these items, adjusted selling, general and administrative expenses as a percent  of revenue (non-GAAP) decreased from 11.2% in 2022 to 9.6% in 2023, due to higher  allocated IT infrastructure costs of $13 million in the second quarter of 2022 related to  the enterprise resource planning (“ERP”) system conversion as well as lower real estate  costs compared to prior year driven by cost mitigation actions implemented.    “Research and Development Expenses” will be revised as follows:  Research and development expenses were $77 million in 2023, compared to $64 million  in 2022. As a percentage of revenue, thes