Cash registers are fading into history, but NCR (NYSE:NCR) has found ways to move its business forward by expanding its reach beyond making the equipment that cashiers use to make sales to their customers. NCR's offerings now include more sophisticated payment-processing equipment, along with the software and services that clients need to run their businesses more smoothly. So far, the company has done well, even against rising competition.

Coming into Thursday's second-quarter financial report, NCR investors were prepared to see flat sales, but wanted solid bottom-line strength. NCR delivered on the income front, but greater sales declines than expected raised some concerns among investors who had hoped for an upside surprise. Let's take a closer look at NCR and what its latest results mean for its future direction.

NCR self-service machines.

Image source: NCR.

NCR posts mixed results

NCR's second-quarter results showed the struggle that the company is having. Revenue fell 2%, to $1.59 billion, disappointing those who expected only the smallest of declines on the top line. Net income jumped by more than 40%, to $90 million, and earnings of $0.80 per share on an adjusted basis compared favorably to the consensus forecast among investors for $0.76 per share.

Looking more closely at the financials, NCR once again suffered currency headwinds. The payment-equipment company said that revenue would have risen 3% in the absence of foreign-exchange movements and the impact of divesting its interactive printer-solutions business.

NCR once again showed disparate performance among its segments. The hardware segment once again was the weakest, with a 9% drop in segment revenue stemming largely from a one-fifth decline in ATM-related sales. Without the IPS sale, segment sales would have been flat, with self-serve checkout units and point-of-sale equipment seeing substantial upticks in demand.

Software revenue rose 3%, with cloud-related gains helping to offset weakness in software-licensing revenue. Services revenue rose by 2%. All three segments would have posted modest sales gains on a constant-currency basis.

CEO Bill Nuti was pleased with NCR's results. "The diversity of our revenue streams and growing strength in software, particularly cloud, drove financial results that were in-line with our expectations," Nuti said, "and keep us on target to achieve our full year outlook." The CEO noted that NCR is gaining market share in key recurring-revenue-generating businesses like the cloud, and new enterprise transformation using self-serve and point-of-sale solutions should keep gaining momentum.

Can NCR keep pushing higher?

NCR is hopeful about its future. In Nuti's words, "Our goal is to further expand our leadership position in the omni-channel market, while continuing to focus on disruptive innovation, solution development, and market-leading services delivery."

NCR noted that some headwinds during the second quarter should reverse themselves during the rest of the year. Some software-license revenue is expected to come in during the third or fourth quarters, and larger customer rollouts of ATMs should help that division's results in the fourth quarter.

Yet NCR's guidance didn't entirely reflect that positive outlook. The company kept its full-year guidance unchanged, repeating its expectations for sales to come in between $6.63 billion and $6.75 billion. Earnings guidance also remained the same with a range of $3.32 to $3.42 per share on an adjusted basis. That works out to 10% to 13% bottom-line growth, which is reasonably solid for the company.

Third-quarter guidance came in below expectations. NCR projected revenue of between $1.66 billion and $1.70 billion, which was less than the $1.73 billion consensus forecast among those following the stock. The range of adjusted earnings from $0.88 to $0.93 per share barely touches what investors want to see, leaving the potential for a shortfall.

Because of those downbeat figures, NCR investors weren't entirely happy with the report, and the stock dropped 7% in after-hours trading following the announcement. In order to rebound, NCR will have to show that its setback was only temporary, and that it can win back those lost sales in future quarters. Otherwise, shareholders could have a crisis of confidence in their views on NCR's long-term future.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends NCR. The Motley Fool has a disclosure policy.