Diebold Nixdorf (NYSE:DBD) reported higher second-quarter revenue, adjusted EBITDA and earnings per share as retail demand and cost discipline helped offset timing delays in banking deployments and higher memory costs.
Revenue rose 1.4% year over year to $928 million and increased more than 4% sequentially. Adjusted EBITDA grew 8% from a year earlier to $121 million, while adjusted earnings per share increased 17% to $1.10. The company reaffirmed its full-year revenue, EBITDA, free-cash-flow and adjusted-EPS outlook.
“Underlying customer demand remains healthy,” Marquez said, adding that the company’s order book, backlog and customer deployment schedules support its confidence in the full-year outlook.
Retail Growth Offset Banking Timing Delays
Retail revenue increased approximately 24% year over year and 9% sequentially, supported by point-of-sale growth in Europe and North America. Retail product and service revenue both posted double-digit growth for the second consecutive quarter.
The company cited several European wins, including a point-of-sale order for more than 4,000 units from an existing customer in Germany, a 1,600-unit order in Romania and an 800-unit new-customer win in Germany. It also secured a 1,500-lane self-checkout deployment with a major U.K. grocer.
In North America, Diebold Nixdorf said it won self-checkout business with two grocers, a point-of-sale deployment with a quick-service restaurant chain, and a service agreement with a fashion retailer spanning hundreds of stores.
The company also reported growing adoption of its Vynamic Smart Vision artificial-intelligence offering. It deployed hundreds of lanes year to date, and new multiyear contracts are expected to expand deployments to thousands of lanes by the end of 2026. Two European grocery customers signed contracts covering 1,400 new lanes, described by the company as its largest new Smart Vision AI deployments to date.
Banking revenue, meanwhile, declined approximately 6% year over year, though it rose about 2% sequentially. Management attributed the year-over-year decline partly to deployment timing. A large public-sector bank tender in Brazil shifted into the second half, with most associated revenue now expected in 2027 rather than 2026.
Marquez said broader branch-automation deployments can also require more coordination because the projects include ATMs, teller cash recyclers, installation work and transaction middleware. He said orders have been placed and customers are awaiting delivery.
Margins Influenced by Tariff Refund and Memory Costs
Chief Financial Officer Tom Timko said second-quarter results included a one-time tariff refund of approximately $13 million, including about $10 million benefiting banking product margins and $3 million benefiting banking services. The benefit was almost entirely offset by roughly $10 million in higher memory costs, primarily affecting the retail business.
Non-GAAP gross margin was 26.4%, essentially unchanged from the prior year and up 100 basis points sequentially. Product gross margin rose 70 basis points year over year to 28.7%, while service margin declined 60 basis points to 24.9%.
Banking product gross margin reached 36.8%, up 620 basis points year over year. Excluding the tariff refund, banking product gross margin would have been 32.5%, which Timko said represented another record for the business.
Retail gross margin was 21.9%, down 180 basis points year over year, reflecting a higher mix of point-of-sale products and the impact of memory costs. Retail service margin improved 230 basis points to 28.2%.
Diebold Nixdorf said it has diversified its memory supply base, taken customer pricing actions and shortened the duration of price quotes amid market volatility. Timko said the company expects to be able to pass through up to 100% of memory-cost increases in future contract pricing and expects retail product margins to improve during the second half.
Cash Flow to Be Weighted Toward Fourth Quarter
Free cash flow was negative $11 million in the quarter, largely due to an approximately $40 million inventory build to secure memory supply and support second-half customer deployments. Management expects inventory to remain elevated through the third quarter before declining in the fourth quarter.
The company expects fourth-quarter free cash flow to benefit from approximately $100 million to $120 million of inventory reductions, other working-capital improvements and annual customer service-contract prepayments.
Diebold Nixdorf also expects approximately $50 million of higher-than-anticipated cash-tax payments in 2026 related to the 2024 and 2025 tax years. The company is excluding those payments from its operational free-cash-flow guidance. Timko said the company expects its ongoing cash-tax run rate to rise by roughly $25 million to $30 million beginning in 2027 because its German legal entities are profitable and no longer have net operating losses.
Full-Year Outlook Reaffirmed
The company reaffirmed 2026 revenue guidance of $3.86 billion to $3.94 billion, adjusted EBITDA guidance of $510 million to $535 million, and adjusted EPS guidance of $5.25 to $5.75. It also maintained expected free cash flow of $255 million to $270 million, excluding the approximately $50 million in discrete tax payments.
Management now expects full-year product gross margins to be comparable with the prior year, while service gross margin is still expected to improve by up to 50 basis points. Diebold Nixdorf expects total operating expenses to decline about 2% for the year, at the high end of its prior 1% to 2% reduction outlook.
At quarter-end, the company had more than $590 million of liquidity, including $282 million in cash and cash equivalents and a $310 million revolving credit facility. Net leverage was 1.4 times. During the quarter, Diebold Nixdorf repurchased about 752,000 shares for $60 million at an average price of $79.82 per share, leaving approximately $57 million under its existing authorization.
About Diebold Nixdorf (NYSE:DBD)
Diebold Nixdorf, Inc (NYSE: DBD) is a leading global provider of connected commerce solutions, specializing in automated teller machines (ATMs), point-of-sale (POS) systems and related software and services for the banking and retail industries. The company’s core offerings include hardware platforms, software applications for transaction management and advanced analytics tools that enable financial institutions and retailers to enhance customer engagement, streamline operations and improve security at the point of transaction.
