On Tuesday, NCR Corporation reported financial results for the three months ended March 31, 2014.

"Our first quarter results show continued progress in the transformation of NCR into a software-driven leader in consumer transaction technologies,” said Chairman and CEO Bill Nuti. “Software-related revenue grew 45% in the first quarter, including SaaS revenue growth of 242%. We are also making good progress integrating the Digital Insight acquisition, which has contributed significantly to our software-related and SaaS revenue growth and broadens our Financial Services technology portfolio similar to the transformation of our Retail Solutions and Hospitality businesses. Although we are seeing a challenging market in Retail Solutions, we are pleased to see the increased strength in the Financial Services industry and feel good about our growth trajectory in 2014. We are reaffirming the NPOI and EPS range, although we do expect to be at the lower end of this range based on what we are seeing today.”

Q1 Financial Summary

In this release, we use the non-GAAP measures non-pension operating income (NPOI), non-GAAP diluted EPS, free cash flow and revenue growth on a constant currency basis. These non-GAAP measures are described and reconciled to their corresponding GAAP measures at the end of this release.

Q1 Supplemental Revenue Information

Software-related revenue grew 45% in the first quarter, including 242% growth related to SaaS, partially due to the contribution of Digital Insight. Professional services revenue increased 30% primarily in the Retail Solutions line of business.

Q1 Operating Segment Results

Revenue increased 8% year on year led by strong growth in Financial Services, Hospitality and Emerging Industries. Within Financial Services, Branch Transformation continues to drive strong year on year growth, and Digital Insight contributed $76 million of revenue in the first quarter of 2014. Retail Solutions results were as expected due to a difficult comparison versus the prior year.

Segment operating income increased 20% year-over-year. The increase was led by growth in Financial Services, which was driven by a higher mix of software-related revenue with the contribution of the Digital Insight business. Retail Solutions and Hospitality operating incomes were negatively impacted by an unfavorable mix of revenue in the quarter and continued investments in their businesses. Emerging Industries operating income was negatively impacted by on-boarding costs associated with managed services contracts.

Free Cash Flow

Net cash provided by operating activities increased $10 million due to increased profitability. Free cash flow decreased $28 million driven by increases in capital expenditures and cash outflows for discontinued operations related to environmental matters.

More information on NCR’s Q1 2014 earnings, including additional financial information and analysis, is available on NCR’s Investor Relations website at http://investor.ncr.com/.

2014 Outlook

^* Includes 1% of expected unfavorable foreign currency fluctuations; previous revenue guidance was 12% - 14% year-over-year growth.

^** For 2013, includes actuarial mark-to-market pension adjustment; for 2014, excludes actuarial mark-to-market pension adjustments to be determined in Q4 2014.

NCR expects approximately $200 million of other expense, net including interest expense in 2014 and that its full-year 2014 effective income tax rate will be approximately 26%.

Q2 2014 Outlook

For the second quarter of 2014, the Company expects non-pension operating income (NPOI) to be in the range of $205 million to $215 million, compared to $182 million in the second quarter of 2013 and income from operations to be in the range of $163 million to $173 million, compared to $139 million in the second quarter of 2013. NCR expects its second quarter 2014 effective income tax rate to be approximately 29% and other expense, net including interest expense to be approximately$50 million.